Concept explainers
Concept introduction:
Cost Volume Profit (CVP) Analysis:
The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.
Contribution margin means the margin that is left with the company after recovering variable cost out of revenue earned by selling smart phones. The formula for contribution margin is as follows:
Contribution margin = Sales - Variable cost.
Similarly contribution margin ratio = Contribution/sales
To choose:
The correct option to subtract from the Sales Revenue when calculating contribution margin
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Managerial Accounting
- Which of the following is a prime cost? A. indirect materials B. direct labor C. administrative expenses D. factory depreciation expensesarrow_forwardWhich of the following is a conversion cost? A. raw materials B. direct labor C. sales commissions D. direct material usedarrow_forwardClassify each of the following as a variable, fixed cost or mixed cost. a. Direct labour b. Depreciation of machinery c. Factory rental d. Factory managers salary e. Commissions paid to sales personnel f. Salaries of sales clerks g. Maintenance for production equipment based on production volume h. Telephone chargesarrow_forward
- Which of the following is a part of Prime Cost? a. Direct Labour b. Indirect Wages c. Rent of Factory d. Depreciation on Plantarrow_forwardWhich of the following costs would be considered a period rather than a product cost in a manufacturing company? Manufacturing equipment depreciation. Property taxes on corporate headquarters. Direct materials costs. Electrical costs to light the production facility.arrow_forwardWhich of the following would probably properly classified as a step cost with respect to the volume of production ? Depreciation computed on an annual basis Total salaries paid to quality -control inspectors Real estate taxes President of the company's salaryarrow_forward
- Property taxes on a company’s factory building would be classified as a(n): a. Product cost b. Opportunity cost c. Period cost d. Variable cost e. Administrative cost f. Selling costarrow_forwardFor manufacturing firms, inventoriable costs include ________. a. plant supervisor salaries. b. depreciation motor vehicles – sales staff. c. advertising costs. d. distribution costs.arrow_forwardThe following would be classified as product costs except:a. property taxes on production equipmentb. insurance on factory machineryc. wages of machine operatorsd. delivery expensee. answer not givenarrow_forward
- Which of the cost below is not classified as fixed cost? a) Depreciation of machine b) Electricity c) Rental of factory d) Salary for production managerarrow_forwardManufacturing costs would not include a. Sales salaries expense b. Indirect materials used c. Indirect labor costs d. Depreciation n factory equipmentarrow_forwardwhat of the costs is an example of a cost that remains the same in total as the number of units produced changes a. salary of a factory supervisor b. direct materials c. direct labor d. units-of-production depreciation on factory equipmentarrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College