Compare between gross margin and contribution margin

Assignment Help Financial Accounting

Reference no: EM133606168

Cost Accounting

Question 1: Provide brief written responses for the following questions

A) Define the cost accounting and identify 2 objected for cost accounting
Objectives:

B) classify the cost according to :
1- nature:
2- Behavior:

c) complete the following sentence:
1) ------- -------- -----------------is the cash or cash equivalent value sacrificed for goods & service that are expected to bring a current or future benefit to the organization.
2) ----------- --------------product cost that can be feasibly identified with units of production.
3) ------------- ---------------------------sum of direct material and direct labor.
4) ----------- ---------------sum of direct labor and OH.
5) ---------------- ----------------any end to which a cost is assigned.

Question 2 :

A) Oasis training center in Murtfat al Matar charges OR200 per participant. The estimated fixed cost of oasis for the period is OR 80,000. the variable cost per participant is expected to be OR 120, the variable cost consist of printed materials, stationary and refreshments. As the consultant of Oasis , find out the number of participants needed to break even in unit and in OR.

B) Suppose that Super Bikes wants to produce a new mountain bike called Hero1 and has forecast the following information:
Price per bike = $800
Variable cost per bike = $300
Fixed costs related to bike production = $55,000
We want you to help us to determine the needed bikes to break even in Q and $.

C) Suppose Rana company has two products, wallets (W) and key chain (K) , and the following budget:

	Wallet	Keychain	Total
Expected Sales	60	40	100
Revenue $200 & $100 per unit	$12,000	$4,000	$16,000
Variable costs, $120 & $70 per unit	$7,200	$2,800	$10,000
Contribution Margin, $80 & $30 per unit	$4,800	$1,200	$6,000
Fixed Costs			$4,500

WHAT IS THE BEP FOR RANA, S COMPANY NOW?

D) Classification of costs can be made according to the following basis.

A. Classification according to elements B. Classification according to nature C. Classification according to behavior (explain the 3 of it briefly).

Question 3: From the following information compute Raw Material requestioned cost and COGS.

Revenue $420,000

Beginning inventory of direct materials, January 1 22,000

Purchases of direct materials 146,000

Ending inventory of direct materials, December 31 16,000

Direct manufacturing labor 18.000

Indirect manufacturing costs 40,000

Beginning inventory of finished goods. January 1 35.000

Cost of goods manufactured 104,000

Ending inventory of finished goods. December 31 36,000

Operating costs 140,000

Question 4: compare between Gross Margin and Contribution Margin ?

Question 5: The manager of food services trying to decide whether to rent a line of snack vending machines. Although individual snack items have various acquisition (variable) costs and selling prices. She decided that an average selling price of $1.50 per unit and an average acquisition (variable) costs of 1.20 per unit will suffice for purpose of this analysis. She expected the following revenue and expense relationship.

	Per Unit	Percentage of Sales
Selling price	51.50	100%
Variable cost of each item	120	80
Selling price less variable cost	.30	20%
Monthly fixed expenses:
Rent	53,000
Wages for replenishing and servicing	13.500
Other fixed expenses	1.500
Total fixed expenses per month	18,000

Question 6: Ahmad company has total variable cost of 80% of total revenues and fixed cost of $20 million per year. There are 70.000 patient -day estimated for next year. What is the break-even point expressed in total revenue?

Question 7: fill in the blanks for each independent case

Case	SP per unit	VC per unit	Total unit sold	Total CM	Total FC	Net income
1	$26	_	125,000	$750,000	675,000	_____-
2	10	6	100,000	_	320,000	______
3	21	18	_	63,000	49,000	____

Question 8: Assume that SP is $.50 per unit , VC is $.40 per unit and FC is $6000 .Assume that target after tax is $288, find the number of units to be sold to achieve the after tax income target of $288 is as follows and tax rate is 40%:

Q8-1 if the target cost increase from $ 288 to $480 what is the new number of units ?

Q8-2 X company purchased a new piece of machinery to expand the production output of its top of the line car model. They predicts sales revenue of $500,000 . Fixed cost is $ 300,000 and CM % is 75%
how much margin of safety?
Q8-3 X company purchased a new piece of machinery to expand the production output of its top of the line car model. They predicts sales revenue of $600,000 . Fixed cost is $ 300,000 and CM % is 75%
how much margin of safety?

Q8-4 Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its150-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. The amount of net income on rooms that will be generated if the hotel is completely full throughout the entire year is _____.

Q8-5 What is the BEP in $ for Z-Boxes company if you know the CM% = 60% and the total FC are $1,200, 000.

Question 9. X Hospital has total variable costs of 80% of total revenues and fixed costs of $20 million per year. There are 70,000 patient-days estimated for next year. What is the break-even point expressed in total revenue?
a. $100 million is the break-even point.
b. $10 million is the break-even point.
c. $12.5 million is the break-even point.
d. None of these answers is correct.

Q9.1: If the sales price per unit is $34, the unit variable cost is $19, and the break-even point is 12,000 units, then the total fixed costs are _____.
a.$340,000 b.$190,000c.$180,000 d.$530,000
Q9.2: Al Rustaq Company currently sells 19,000 units. Total fixed costs are $84,000, and the contribution margin per unit is $6.00. al- Rustaq's tax rate is 40%. The margin of safety in units is _____.
a.3,000 units b. 5,000 unitsc.7,500 unitsd.14,000 units
Q9.3: _____ is the ratio of fixed costs to variable costs
a.Contribution margin b. Break-even point c.Operating leverage d.The margin of safety
Q9.4 :_____ is a range of activity over which a variable cost per unit remains constant or a fixed cost remains fixed in total.
a. Margin of Safety b. BEPc. Operating leverage d. Relevant Range
Q9.5 : _____ is the excess of sales over the cost of goods sold.
A. Gross margin B. contribution-margin ratio C. variable-cost ratio D.The sales mix
Q9.6 _____ is the relative proportions or combinations of quantities of products that comprise total sales.
a.Sales mixb. Gross marginc.Contribution-margin ratio d.Variable-cost ratio
Q9,7 _____ a firm's ratio of fixed and variable costs
a. Contribution margin b. Break-even point c. Operating leverage d. The margin of safety
Q9.8 If total fixed costs are $84,000, contribution margin per unit is $6.20, and targeted after-tax net income is $18,000 with a 40% tax rate, then the number of units that must be sold is _____.
a.14,223 units b.17,853 unitsc. 18,387 unitsd.21,504 units

Q9-9: complete the following sentence
_ _ _ __ _ _ is a cost attribution to cost units on the basis of benefit received from indirect activities.
An activity is an event that incurs costs.
_ _ _ __ _ _ _ is defined as anything for which a separate measure of cost is desired/required.
_ _ __ _ _ _ __ _ _ _ _ _ : The overheads cost allocated to a distinct type of activity or related activities.
_ _ _ __ _ _ _ __ _ is any factor or activity that has a direct cause and effect relationship with the resources consumed.
_ _ _ _ _ __ _ _ _ An item of production or a service for which it is useful to have cost information.
_ _ _ _ __ _ _ _ __ _ _ _: The process of identifying, analyzing, summarizing, recording and reporting costs associated with business operations.
__ _ _ _ _ __ _ _ _ Those costs that are directly associated with the manufacturing process.
Indirect/overheads costs: Those costs that are not directly identifiable with a unit of production.

Q9.10 Write down 3 advantages and disadvantages for ABC system

Reference no: EM133606168

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