Fundamentals of Cost Accounting

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Accounting 111 Pollard Chapter 3 Summary Learning Objectives (L.O): 1, 2, 4, and 5 Assignment: Exercises 19, 22, 27, 30, 31, 32, 33, 40, and 41 Problems none Read the sections of the chapter which cover the Learning Objectives listed above and review the PowerPoint slides for the chapter. Use this information to complete this chapter summary. Test your understanding of the material by completing the assignment for the chapter. L.O.1: Use cost-volume-profit (CVP) analysis to analyze decisions. CVP studies the relationship between revenues costs volume And their effect on profits Variable Represents X Volume P Price per unit V Variable cost per unit F Fixed cost CM Contribution margin per unit Rewriting the income statement horizontally, Profit = P (X) – (V X +F ) or Profit = (P - V ) X –F Using this equation, what is the profit for U-Develop for the month of March? $1,380 What is the contribution margin? The contribution margin Is the amount leftover to cover fixed costs and add to operating profit. What is the contribution margin ratio? It is the contribution margin as a % of sales revenue and can be calculated with total or per unit amounts; it is the relationship between the contribution margin and sales Contribution margin per unit = P - V Using this equation, what is U-Develop’s contribution margin? $.24
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This note was uploaded on 11/04/2011 for the course ACCT ACCT111 taught by Professor Na during the Spring '11 term at American River.

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Chapter 3 Key - Accounting 111 Pollard Chapter 3 Summary...

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