ACIS 2116 Chapter 7 Part 2 with blanks

ACIS 2116 Chapter 7 Part 2 with blanks - ACIS 2116 Chapter...

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ACIS 2116 Chapter Seven – Part 2 Cost-Volume-Profit Analysis and Variable Costing
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2 The Contribution Margin Income Statement Total Unit Sales Revenue 100,000 $ 50 $ Less: Variable costs 60,000 30 Contribution margin 40,000 $ 20 $ Fixed costs 30,000 Net operating income 10,000 $ The contribution margin income statement The contribution margin income statement emphasizes cost behavior. Contribution margin emphasizes cost behavior. Contribution margin covers _____ _____ and provides for income. covers _____ _____ and provides for income.
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3 The Contribution Margin Income Statement Comparison of the Contribution Margin Income Statement with the Traditional Income Statement Traditional Contribution Margin (costs organized by function) (costs organized by behavior) Sales 100,000 $ 100,000 $ Less cost of goods sold 70,000 Less variable expenses 60,000 Gross margin 30,000 $ Contribution margin 40,000 $ Less operating expenses 20,000 Less fixed expenses 30,000 Net operating income 10,000 $ Net operating income 10,000 $ Used primarily for ________ reporting. Used primarily by __________.
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4 Absorption Costing Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling and Administrative Expenses Fixed Selling and Administrative Expenses Absorption Costing Product Costs Period Costs
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5 Absorption vs. Variable Costing Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling and Administrative Expenses Fixed Selling and Administrative Expenses Absorption Costing Product Costs Period Costs Product Costs Period Costs Variable Costing
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6 Test Your Knowledge Which method will produce the highest values for work in process and finished goods inventories? a. Variable costing. b. Absorption costing. c. They produce the same values for these inventories. d. It depends. . .
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7 Hokie Company produces a single product with the following information available: Number of units produced annually 25,000 Variable costs per unit: Direct materials, direct labor, and variable mfg. overhead 8 $ Selling & administrative expenses 2 $ Fixed costs per year: Manufacturing overhead 125,000 $ 90,000 $ Unit Cost Computations
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8 Unit product cost is determined as follows: Selling and administrative expenses are always treated as ______ ______ and deducted from revenue as incurred.
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ACIS 2116 Chapter 7 Part 2 with blanks - ACIS 2116 Chapter...

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