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PPT_for_Chapter_6_without_in-class_assignment

PPT_for_Chapter_6_without_in-class_assignment - ACC 200...

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ACC 200 Fall 2010 Chapter 6 Roby B. Sawyers, CPA, Ph.D. College of Management
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2 Primary Topics The Contribution Margin income statement The tools of CVP analysis Contribution margin per unit, CM ratio and Operating leverage Calculating the Breakeven Point – single product and multiple products Calculating sales to reach a target profit – before and after tax
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3 The Traditional Income Statement Focuses on product vs. period costs: Sales - COGS (Fixed and Variable) Gross Margin - S, G, and A Expenses (Fixed and Var.) Net Income
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4 The Contribution Margin Income Statement Focuses on fixed costs vs. variable costs: Sales - VC (Manufacturing and S, G and A) Contribution Margin - FC (Manuf. and S, G and A) Net Income
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Income Statements TRADITIONAL CONTRIBUTION MARGIN Sales Less: Cost of Goods Sold: Variable Costs Fixed Costs Total Cost of Goods Sold Gross Profit Less: S&A Costs: Variable Costs Fixed Costs Total S&A Costs Net Income Sales Less:Variable Costs: Manuf. Costs S&A Costs Total Variable Costs Contribution Margin Less: Fixed Costs: Manuf. Costs S&A Costs Total Fixed Costs Net Income $1,000 350 150 $ 500 $ 500 $ 50 250 $ 300 $ 200 $ 1,000 $350 50 $400 $600 $150 250 $400 $200
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6 Contribution Margin
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