CVP Sensitivity Analysis (Multiple Products). Dolomite Company produces two different products that have the following annual data (this is the base case): Classic Sales price/unit Variable Cost/unit Expected Unit Sales Sales Mix Fixed Costs $200 $120 5000 20% Skip question Modern $100 $50 20,000 Start Solving 80% Total 25,000 Required: For each of the independent situations in requirements b through d, assume that total sales remain at 25,000 units. 100% 1. Prepare a contribution margin income statement for the base case. 2. Refer to the base case. What would the operating profit be if the Modern sales price (1) increases 10 percent, or (2) decreases 10 percent? 1,000,000 3. Refer to the base case. What would the operating profit be if Classic sales volume decreases 500 units and there is a corresponding increase of 500 units in Modern sales? Exit 4. Refer to the base case. What would the operating profit be if total fixed costs decrease 10 percent? Does this decrease in fixed costs result in higher operating leverage or lower operating leverage? Explain.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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