Abida Archive
Cost Volume Profit (CVP) Relationship in Graphic Form: Learning Objectives: Prepare a CVP graph or breakeven chart. The relationships among revenue, cost, profit and volume can be expressed graphically by preparing a cost-volume-profit (CVP) graph or break even chart. A CVP graph highlights CVP
Cost Volume Profit (CVP) Formulas: Contribution margin = Sales – Variable expenses (manufacturing and non-manufacturing) Net operating income = Contribution margin – Fixed expenses (manufacturing and non manufacturing) Contribution margin ratio = Contribution margin / Sales Break even point (units) = Fixed expenses /
Customer-Level Activities Definition: Activities that are carried out to support customers but that are not related to any specific product.
Curvilinear Costs Definition: A relationship between cost and activity that is a curve rather than a straight line.
Current Ratio: It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. It is calculated by dividing the total of the current assets by total of the current
Current Assets to Proprietor’s Fund Ratio: Current Assets to Proprietors’ Fund Ratio establishes the relationship between current assets and shareholder’s funds. The purpose of this ratio is to calculate the percentage of shareholders funds invested in current assets. Formula: Current Assets to Proprietors Funds
Cross-Subsidization Definition: Improper assignment of costs among a company’s segments; also called cost distortion.
Criticism/Disadvantages or Limitations of Return on Investment (ROI) Method of Performance Evaluation: Learning Objectives: What are the limitations of return on investment method of performance evaluation? Although the return on investment is widely used in evaluating performance, it is not a perfect tool. The
Creditors / Accounts Payable Turnover Ratio: Definition and Explanation: Credit turnover ratio is similar to the debtors turnover ratio. It compares creditors with the total credit purchases. It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include both sundry creditors
Costing By Departments: The nature of manufacturing operations in firms using process or job order cost procedures is usually such that work on product takes place in several departments. With either procedure, departmentalization of materials, labor, and factory overhead costs facilitates application of responsibility
Costing By Departments: The nature of manufacturing operations in firms using process or job order cost procedures is usually such that work on product takes place in several departments. With either procedure, departmentalization of materials, labor, and factory overhead costs facilitates application of responsibility
Cost-Volume-Profit (CVP) Graph Definition: The relations between revenues, costs, and level of activity in an organization presented in graphic form.
Contribution Margin and Basics of Cost Volume Profit (CVP) Analysis: Learning Objectives: Define and explain contribution margin. Prepare a contribution margin format income statement. What are the advantages of calculating contribution margin? Definition and Explanation of Contribution Margin: Contribution margin is the amount remaining
Cost Volume Profit Relationship – (CVP Analysis): After studying this chapter you should be able to: Explain the objectives of cost volume profit analysis (CVP Analysis & concept)? Define and explain contribution margin and contribution margin ratio. Define, explain and calculate breakeven point? Explain
Cost Terms, Concepts, and Classifications: After Studying this chapter you should be able to: Identify and give examples of each of the three basic manufacturing cost categories. Distinguish between product costs and period costs and give examples of each. Prepare an income statement including
Cost Structure Definition: Cost structure is the relative proportion of fixed, variable, and mixed costs found within an organization.
Cost Volume Profit (CVP) Consideration in Choosing a Cost Structure: Definition and Explanation of Cost Structure: Cost structure refers to the relative proportion of fixed and variable costs in an organization. An organization often has some latitude in trading off between these two types
Cost Reconciliation Definition: Cost reconciliation is the part of a production report that shows what costs a department has to account for during a period and how those costs are accounted for.
