Phil Notess - Value Chain- R+D, Design, Production,...

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Value Chain - R+D, Design, Production, Marketing, Distribution, Customer Service 5 Step Process - Identify Problem, Obtain Info, Make Predictions, Make Decisions, Implement-Evaluate-Learn Cost-resource to achieve specific objective. Actual Cost-cost incurred(Past). Budgeted-predicted or future cost Cost Object- anything for which a measurement of cost is desired. Cost Accumulation-collection of cost data Direct Costs - costs that are traced directly to the cost object Indirect-allocated to the cost object Variable - changes in total proportion to changes in the related level of total activity or volume. Fixed- remains unchanged in total for a given time period despite wide changes in the related level of total activity or volume. Unit Cost- Total Cost/Number of units Direct Materials Inventory- DM in stock waiting to be used in manufacturing process. Ex- comp chips for cell phone Work in Process Inventory - goods partially worked on but not yet completed. Ex- phones at diff. stages of production Finished Goods Inventory- goods completed but not yet sold. Ex- Completed Cell Phones Inv Costs - costs of a product that are considered assets in the balance sheet when incurred and become COGS when prod sold. Period Costs- all costs on IS other than COGS- expenses of the period when incurred 1.Perrier purchased by safeway for sale to customers – Inventory 2. Electricity to provide lighting for assembly line workers at plant- Inventory 3. Depreciation of comp equipment used to update web site directories – Period 4. Electricity used to provide lighting for store aisles- Period Contribution Margin= Cont Margin per unit x Number of units sold……sales – variable costs Contribution Margin % or Ratio= (Sales-Variable Costs) / Sales Equation Method : Revenues - variable costs – fixed costs = Operating Income Revenues = Selling Price x Quantity of Units Sold Revenues= Selling Price x Quantity of Units Sold Variable Costs = Variable Cost per unit x quantity of units sold So, (Selling Price x Quantity of Units Sold) – (VC per Unit x Q units sold) – fixed costs = Operating Income Contribution Margin Method: (Selling Price – VC per Unit) x (Q Units sold) – fixed costs = Operating Income (Contribution Margin per Unit x Q units sold) – fixed costs = Operating Income Break Even Point : Set Operating Income = 0 (Selling Price x Quantity of Units Sold) – (VC per Unit x Q units sold) – fixed costs = Operating Income Op Inc with Tax: Revenues – VC – FC = Target OI Target NI = (Target OI) – Target OI x Tax Rate) Target NI= (Target OI) x ( 1 – Tax Rate) Target OI= (Target NI) / (1-Tax Rate) Revenues – VC – FC = (Target NI) / (1-Tax Rate) Job Costing - used to cost a distinct product. Process Costing-
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This note was uploaded on 11/15/2010 for the course PHIL 101 taught by Professor Hamton during the Spring '10 term at CUNY John Jay.

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Phil Notess - Value Chain- R+D, Design, Production,...

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