With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. Such an analysis is called

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. Such an analysis is called

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 7DQ: Discuss how financial data prepared on the basis of variable costing can assist management in the...

See similar textbooks

Related questions

Q: Your team is conducting a CVP analysis for a new product. Different sales projections have different…

A: Cost estimation is defined as the approximation of the program or operation or project cost. It is…

Q: Which of the following is not one of the benefits of breakeven analysis to businesses? A.…

A: A break-even analysis is a financial tool

Q: The systematic examination of the relationships among selling prices, volume of sales and…

A: It is significant for every busines to analyse the quantity to be sold for achieving break even and…

Q: Another of Matilda’s colleagues is looking at the yield curve and asks for an explanation as to why…

A: Biased expectation theory is defined as the theory of term structure of the rate of interest. In the…

Q: When companies are price-setters, their products and services are priced by managers using a…

Q: A growing firm is contemplating switching from a FIFO to a LIFO cost flow assumption forinventories…

A: In case of rising prices, when the LIFO is applied the cost of goods sold will increase (as the…

Q: Managers have some flexibility in setting the estimated useful lives of depreciable assets. Explain…

A: The managers can determine the useful life of assets. The depreciation per year depends on this…

Q: Price accuracy and right product offering are important aspect of an efficient order-to-cash (OTC).…

A: Order to Cash (O2C) refers to a business process which involves the whole procedure of order…

Q: a difference in cost-plus pricing and target costing is that target costing starts with the price…

A: Target costing says that first target selling price is calculated, then markup is deducted from…

Q: Which of the statement is not a true reflection of Target cost gap ? The target cost gap =…

A: target costing is the way in which deriving of a target cost is done to set the production manager…

Q: In a manufacturing setting, "the best short-term profit maximization approach is to maximize…

A: In the short run, fixed costs are constant. Therefore, to maximize the profit, the contribution per…

Q: Given that a breakeven sales level is not a sales prediction, explain why it is so widely used in…

A: Break-even sales are the sales at which company earns no profit no loss. In other words, break-even…

Q: Estimate SHATTA MOVEMENT LTD normal fixed and variable cost of production using linear regression.

Q: Assume that ABC Company planned to conduct the market survey to know the opinions of the customers…

A: There are different types of costing method which are available to determine the required profit of…

Q: Which of the following choices correctly denotes factors that can influence a company's pricing…

A: Pricing a product or service is an important task for every organisation. It is the basis for the…

Q: Which of the following explains why managers compare the budgeted costs to actual costs? a.…

A: Managers measures budgeted expenses at the end of the year and provide an average of the costs that…

Q: Cost calculation

A: Cost is the amount incurred in production of product, carrying out a process, conduct of sales or…

Q: Being the accounting specialization student, explain the costing method followed by the ABC Company…

A: The answer for the question on the costing method followed by ABC Company to get required profit is…

Q: We can get a sense of how model output responds to changes in inputs from sensitivity analyses. Some…

A: Sensitivity analysis is used to find out the change in input of one value lead to change in the…

Q: A type of strategic pricing based on analytical methods is used to: Multiple Choice Utilize…

A: A pricing strategy is a method used to establish the best price for a product or service.

Q: When performing sales mix analysis, which one of the following is false: Oa. Producing and selling…

A: Breakeven sales is that point of sales revenue at which business is covering its fixed costs and…

Q: Cost Plus Pricing This is the most common cost-based approach to pricing a product, in which a…

A: Cost Added Pricing seems to be the most typical cost-based method of setting prices for the goods,…

Q: When companies are price-setters, their products and services a. are priced by managers using a…

A: Definition: Price-setter: Price-setter is a company that acquires control over the prices of its…

Q: hink? Justify with

A: QuickBooks Software Managing Company Accounts is No Sweat With Quickbooks Software With our…

Q: QUESTION 1 Match the type of company and its most likely pricing approach given the company sells…

A: Cost-Plus Pricing Strategy: Retailers frequently use this pricing approach to set prices. Cost-plus…

Q: From a strategic management perspective, the primary reason a firm performs CVP analysis is to find…

A: CVP Analysis: CVP analysis is used to determined the how the changes in volume and costs effect the…

Q: How would your error affect breakeven sales and operating income under the proposed sales commission…

A: Affect of error on break-even sales and operating income:

Q: APPLY THE CONCEPTS: Target income (sales revenue) Another useful method for figuring out the type…

A: "Since you have posted a question with multiple sub parts, we will solve first three sub parts for…

Q: CVP analysis makes all of the following assumptions except a change in volume is the only…

A: In order for a CVP analysis to be accurate, certain assumptions must be met. These assumptions are:…

Q: 1- What potential problems should be avoided in relevant-cost analysis?

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: RRECT THE SENTENCES: Identify the word that makes the sentence incorrect and write down the correct…

A: Gross profit refers to the profit that an organization makes by deducting cost of goods sold from…

Q: Determine which one of the following statements is correct: O a. Achange in the sales mix will…

A: The breakeven point is the point where a company does not have any profit and loss from their sales,…

Q: Among the simple average pricing and weighted average pricing method. Which of the store ledger…

A: Simple Average Pricing method considers the average prices by taking only the prices and averaging…

Q: CVP analysis indicates that your start-up will break even with the current sales mix and price…

A: CVP stands for Cost Volume profit analysis is the one which is used for determining how the changes…

Q: Gross profit variance analysis can be used to study the effect of: a. Changes in volume of goods…

A: Gross profit variance analysis is referred as the measurement tool used to measure the capability of…

Q: Operating profits move in the same direction as sales when variable costing is used if selling…

A: Introduction:- Variable costing varies in respective of units production Which is used for making…

Q: Which of the following is not a revenue driver factor which affects sales volume for a manufacturing…

A: Revenue driver factor affects the sales volume for manufacturing firms. Management can use the cost…

Q: When performing sales mix analysis, which one of the following is false: O a. Normally the…

A: Cost-Volume-Profit (CVP) Analysis: It is a method followed to analyze the relationship between the…

Q: Companies enjoy many benefits from using JIT. Which is not a benefit of adopting JIT? a. Ability to…

A: Just-in-time manufacturing system: Just-in-time (JIT) manufacturing system is an approach to…

Q: The differential analysis approach to pricing for special orders could lead to under-pricing in the…

A: Differential analysis approach helps in analyzing the future investment opportunities and it…

Q: A form of implicit collusion where one firm in an oligopoly announces a price change which is…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Question

With the aid of computer software, managers can vary assumptions regarding
selling prices, costs, and volume and can immediately see the effects of each
change on the break-even point and profit. Such an analysis is called

A. “What if” or sensitivity analysis.
B. Vary the data analysis.
C. Computer aided analysis.
D. Data gathering.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

If Promus could make order amounts after realizing demand, what would the expected value of this information be? Use the simulation results to calculate the mean profit of this case to compare with the mean profit of the non-perfect information case. You will need to enter a formula for Sales.
Discuss how financial data prepared on the basis of variable costing can assist management in the development of short-run pricing policies.
Which of the performance measuresâ€”ROI, RI, or EVAâ€”is best, and why? Explain your answer thoroughly.
_____Identifying the relationship between the activity and the costs is a key step in which of the following cost estimation methods? a) Scattergraph. b) High-low method. c) Linear regression. d) Account analysis.
When using the general methods to estimate cost behavior, A. It is a good idea to use multiple methods so results can be compared B. Managers often apply their own best judgement as a first step in the estimation process C. Results are likely to differ from method to method D. Large differences in methods suggest that the cost cannot be estimated.
Price accuracy and right product offering are important aspect of an efficient order-to-cash (OTC). How can it be achieved with a properly managed OTC? What are your suggestions? Why? (Explain in min. 3-4 sentences.)
Search about how different techniques are efficient to estimate cost. – Engineered estimate of cost– Analysis at the account level– Regression analysis
From the standpoint of cost control, why is the FIFO method superior to the weighted-averagemethod? Is it possible to monitor cost trends using the weighted-average method?
Question 2 A seminar was recently attended by the Managing Director of XYZ Manufacturing Company Limited located at Sheffield. The focus of the seminar was "optimising scarce resources utility in a manufacturing setting with particular reference to linear programming". On his return to his base, he called for a meeting with the Management to share his experience from the seminar and the impact this will have on the decision by the Board to produce two major products in the years ahead. A group of external research experts had previously been commissioned and the following represents information from the research carried out by them The expected products are "Best" and "Smart" with expected costs statistics as follows: Best £ £ Smart (3kg@£50/kg) Material costs (5kg@£50/kg) 250 150 Labour costs Machinery time 30 (4 hours @£15/Hr) 60 (4 hours @£10/hr) 40 (2hours @£15/Hr) (5hours@£10/Hr) Other Processing Time 50 The applicable pricing policy is based on total cost of production plus 20%…
Which of the following is NOT true of regression techniques for estimating costs? a) They permit the inclusion of more than one predictor. b) They typically use the highest and lowest activity points to estimate the relation between cost and activity. c) They help develop estimates that have a broader base than those based on a few select points. d) They are designed to generate a line that best fits a set of data points.
What tool can you use to incorporate probabilities into the What-If analysis? Sensitivity analysis Decision Tables Cost-volume-profit (CVP) graph Degree of operating leverage Margin of Safety
Briefly explain the concept of economic, profitmaximizing pricing. It may be helpful to use graphs in your explanation.