Behavioral considerations in capital budgeting
Of the four methods of analyzing a major purchase, which one is the best? While the payback period method and the accounting rate of return…
Accountancy Notes
Cost behavior and operating income
At the heart of break-even point or break-even analysis is the relationship between expenses and revenues. It is critical to know how expenses will change…
Break-even Point in Sales Dollars
One can determine the break-even point in sales dollars (instead of units) by dividing the company’s total fixed expenses by the contribution margin ratio. The…
Desired Profit in Units
Let’s say that the owner of Oil Change Co. needs to earn a profit of $1,200 per week rather than merely breaking even. You can…
Break-even Point in Units
The break-even point in units for Oil Change Co. is the number of cars it needs to service in order to cover the company’s fixed…
Desired Profit in Sales Dollars
Let’s assume a company needs to cover $2,400 of fixed expenses each week plus earn $1,200 of profit each week. In essence the company needs…
Break Even Analysis – Contribution Margin
An important term used with break-even point or break-even analysis is contribution margin. In equation format it is defined as follows: Contribution Margin = Revenues…
Standard Cost System
Standard costing is an important subtopic of cost accounting. Standard costs are usually associated with a manufacturing company’s costs of direct material, direct labor, and…
What are the Contingent Liabilities
Contingent liability is a potential obligation which may in the future develop into actual liability or may dissolve without necessitating any outlay. The crucial characteristics…
Importance of An Accurate Valuation of Inventories
The auditor examines the particular thing to assume himself of its existence. Physical examination requires identification of the item. One must be convinced that he…