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Exam#2 Study Guide

# Exam#2 Study Guide - BMGT GUIDE BMGT 221 EXAM#2 STUDY221...

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BMGT 221 EXAM#2 STUDY GUIDE BMGT 221 Exam #2 Study Guide Ch-6 A. Cost behavior 1. Variable cost (p303) 2. Fixed cost (p305) 3. Mixed cost (p307) 4. Relevant range (p307) 5. Other cost behavior(p309) B. Determine cost behavior Y=kx + b K=variable cost per unit b=fixed cost 1. High-low method (depend on lowest and highest volumeMnot depend on month/cost ) (p316) 2. Regression analysis C. Contribution marginal income statement (p321) 1. Internal use only 2. Organized by behavior instead of function 3. Cost classified by variable and fixed cost-whether relate to purchase / manufacture or administrative activities D. Variable costing VS. Absorption costing (p326, 328) 1. Difference in inventoriable / period cost (p326) 2. Difference of gross profit (classified by manufacture/non-manufacture cost) & contribution margin (classified by fixed/variable cost) CH-7 A. Cost-Volume-Profit 1. Definition (p364) 2. Assumptions: a. Volume is the only factor affecting costs

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b. Costs and revenue are linear c. Same inventory level (constant fixed and variable cost) d. Sales mix (combination of products) keeps the same e. Within a relevant range of volume f. Most business conditions do not meet these assumptions 3. Unit contribution margin a. Based on units b. CM (per unit) = Sales (per unit)-VC (per unit) = FC + Profit (operation income) 4. Contribution margin ratio a. CM ratio = CM/Sale Rev =(FC + Operation income)/Sale Rev = Unit CM/Unit price b. Based on revenue B. Breakeven point & Target profit 1.
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