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OBJCHP7_09GAR - earn a target net income including when an...

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INTRODUCTORY COST ACCOUNTING UNIT 4 : ( CHAPTER 7) - Cost-Volume-Profit Relationships LEARNING OUTCOMES : 1. Define and compute the Contribution Margin (CM) and the CM ratio and explain how changes in activity affect the CM and net income. Understand the CM format for an income statement. E7-1, E7-3, P7-18, S2-5 2. Show the effects of changes in variable costs, fixed costs, selling price, and volume on the CM and net income. E7-4, E6-5, E6-10, P7-18, P7-19, P7-21 3. Compute the breakeven point by a) the equation method, b) the CM method, and c), using a CVP graph (P7-28 for graph method). E7-5, E7-14, E7-16, S1-IV, 4. Show the effects of changes in one variable on the other variables including variable costs, fixed costs, selling price, volume, and net income. P7-30, P7-31, P7-32, S1-P2 , S3-P4, S4- P6, S5-P7 5. Use the equation method or the CM method to compute the sales in units or $ needed to
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Unformatted text preview: earn a target net income, including when an income tax rate is given. 6. Compute the breakeven point for a multiple product company and explain the effects of shifts in the sales mix on the breakeven point. E7-17, P7-25, P7-26, S3-P5, S7-P10, S8-P11, S9-P12 7. Compute the Margin of Safety and explain its significance. E7-7, S6-P8, S6-P9 8. Compute Operating Leverage and understand how it is used to predict a change in income. E7-8, E7-15 9. Determine the Indifference Point and explain its significance when there are two options with different cost structures. P7-31, P7-32 10. Explain the importance of considering contribution margin when structuring sales commissions. 11. Explain how CVP analysis deals with uncertainty. Problems on Supplementary Handout. plus problems and exercises noted under specific items above. RF 10/11...
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