© 1999 Prentice-Hall Canada Inc. Slide 31 Optimal Use of Limited Resources when something constrains or limits operations (labour hours, machine hours,

Slides:



Advertisements
Similar presentations
1)Market Share 2)Market Growth 3)Total Revenue = Selling Price * Number Sold 4)Profit or Loss = Total Revenue – Total Costs 5)Total Costs = Variable Costs.
Advertisements

Cost-Volume-Profit Relationships
© 2007 Pearson Education Canada Slide 8-1 Relevant Information and Decision Making: Marketing Decisions 8.
Questions Addressed by Cost-Volume-Profit Analysis
Scarce resources: Making production decisions when resources are tight. Choosing among products. Setting production schedules.
Relevant Costs and Benefits
9 - 1 ©2002 Prentice Hall Business Publishing, Introduction to Management Accounting 12/e, Horngren/Sundem/Stratton Chapter 9 Relevant Information and.
Copyright © 2008, The McGraw-Hill Companies, Inc.McGraw-Hill/Irwin Appendix B Profitability Analysis.
Copyright © 2006, The McGraw-Hill Companies, Inc.McGraw-Hill/Irwin 11 th Edition Appendix B.
Operations Management
Chapter 20 Cost-Volume-Profit Analysis and Variable Costing
Breakeven Analysis Part 2 Click here for Streaming Audio To Accompany Presentation (optional) Click here for Streaming Audio To Accompany Presentation.
© 2002 Pearson Education Canada Inc. Slide 8-1 Relevant Information and Decision Making: Marketing Decisions 8.
Cost-Volume-Profit Relationships Chapter 6 © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill The Basics of Cost-Volume-Profit (CVP) Analysis.
Costs and Revenues The webinar will cover: Calculating contribution
Resource Allocation Decisions Managerial Accounting Prepared by Diane Tanner University of North Florida Chapter 9.
Relevant Costs and Benefits
Copyright © 2003 Pearson Education Canada Inc. Slide Chapter 11 Decision Making and Relevant Information.
Chapter 13 Decision-Making and Relevant Information.
Chapter 5. Assumptions of CVP Analysis  Selling price is constant.  Costs are linear.  In multi-product companies, the sales mix is constant.  In.
The importance of Gross margin Example 1: Sales price ok, sales volume ok compared to the size of the company: Sales income100 units x
Slide 1 Your company produces sports T-Shirts. Name some COSTS that might be incurred for you to produce T-Shirts. Over Christmas your production facility.
23-1 Copyright  Houghton Mifflin Company. All rights reserved. Chapter 23 Cost-Volume-Profit Analysis and Variable Costing Belverd E. Needles, Jr. Marian.
UNIT 4 COST VOLUME PROFIT CONCEPTS AC330. Exercise 5-1 Let’s a take a minute to read Exercise 5-1 in the textbook. We will then review the solution.
The Mystery of Calculating The Breakeven Point. What in the world is it? w It is the point at which a company does not make any money. w It is the calculation.
Chapter Six Cost-Volume-Profit Relationships. CVP ANALYSIS Cost Volume Profit analysis is one of the most powerful tools that helps management to make.
Introduction to Management Accounting
5 - 1 ©2002 Prentice Hall Business Publishing, Introduction to Management Accounting 12/e, Horngren/Sundem/Stratton Chapter 5 Relevant Information and.
1 Manufacturing Cost Accounting
Cost-Volume-Profit Relationships Chapter 6 McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Cost-Volume-Profit Relationships Chapter 6 McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Topic Four by Dr. Ong Tze San Cost-Volume-Profit Relationships.
Constraint management Constraint Something that limits the performance of a process or system in achieving its goals. Categories: Market (demand side)
© 2012 McGraw-Hill Education (Asia) Profitability Analysis Appendix B.
Lecture 3 Cost-Volume-Profit Analysis. Contribution Margin The Basic Profit Equation Break-even Analysis Solving for targeted profits.
COST–VOLUME–PROFIT ANALYSIS: ADDITIONAL ISSUES
C3 - 1 Learning Objectives Power Notes 1.Cost Behavior 2.Cost-Volume-Profit Relationships 3.Mathematical Approach to Cost-Volume-Profit Analysis 4.Graphic.
PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA Profitability.
PROFITABILITY ANALYSIS Appendix B PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA.
M AKE VS BUY WEEK 10. Product RProduct S Selling price$12$20 Materials$4$11 Labour hours 24 Machine hours 43 I LLUSTRATIVE QUESTIONS Q 11.2 Maxitank makes.
Relevant Costs and Benefits
Multiple Product CVP Analysis The easy way. What is multiple product CVP Analysis? Sell multiple products Ratio of products sold is assumed constant Determine.
© 2009 Factory Strategies Group LLC. All rights reserved. Manufacturing Cost Accounting Enterprise Excellence Series.
ACCT 2302 Fundamentals of Accounting II Spring 2011 Lecture 18 Professor Jeff Yu.
EXCERCISES ON BES. Compute the Break-even sales in pesos and units 1.A product line is sold at a unit selling price of P9.00. Variable cost is estimated.
6-1 Managerial Accounting Cost Volume Profit: Additional Issues Chapter 2 Dr. Hisham Madi.
Lecture 28. Lecture Overview Splitoff Point Joint Products and By-products Why Allocate Joint Products? Approaches to Allocating Joint Costs Sales Value.
@ 2012, Cengage Learning Cost Behavior and Cost-Volume-Profit Analysis LO 3a – Understanding Break-Even.
Cost-Volume-Profit Analysis
5 - 1 Chapter 5 Relevant Information and Decision Making: Marketing Decisions.
AAT Level 3 Limiting Factors. Objectives 1. Explain what production decisions are required when resources are scarce 2. State the steps to calculate limiting.
Chapter 5 Decision Making: Relevant Costs and Benefits.
Break-even Analysis Lecture-30 Main Ahmad Farhan.
Basics of financial management Chapter 12
University of 6th of October, Egypt
AMIS 310 Foundations of Accounting
The use of linear programming for the allocation of scarce resources
Cost Behavior and Cost-Volume-Profit Analysis
Starter What’s the story? Title: Break-Even.
AMIS 310 Foundations of Accounting
Relevant Costs and Benefits
Lesson 15-2 Determining Breakeven
Example Exercise 6 Operating Leverage Jones, Inc. Wilson, Inc.
Relevant Information and Decision Making: Marketing Decisions
Constraint management
Electronic Presentation by Douglas Cloud Pepperdine University
Lesson 15-2 Determining Breakeven
Cost Accounting for Decision-making
Slide 1. Machine Capacities
Presentation transcript:

© 1999 Prentice-Hall Canada Inc. Slide 31 Optimal Use of Limited Resources when something constrains or limits operations (labour hours, machine hours, raw material, space) determine contribution margin per the limiting factor allocate usage to maximum profit PlainFancy Contribution margin per unit$4.00$9.00 Units of production per hour31 Contribution margin per hour$12.00$9.00 allocate capacity to “Plain” up to expected demand, and then allocate remaining capacity to “Fancy”

© 1999 Prentice-Hall Canada Inc. Slide 32 Optimal Use of Limited Resources Example (P 8-8) Suppose a company makes two products: The fancy saw is more profitable based on contribution margin Plain SawFancy Saw Sales Price$66$100 Variable Costs$50$70 Contribution Margin$16$30 Contribution Margin Ratio (CM/Sales) 24%30%

© 1999 Prentice-Hall Canada Inc. Slide 33 Optimal Use of Limited Resources Example (cont’d) Demand is for more units than the company can produce. There are 20,000 machine hrs available. Two plain saws can be produced in the same time (one hour) as one fancy saw. Calculate the total contribution margin for 20,000 hours for plain saws only and for fancy saws only.

© 1999 Prentice-Hall Canada Inc. Slide 34 Optimal Use of Limited Resources Example (cont’d) PlainFancy Units per hour21 CM per unit$16$30 CM per hour$32$30 Total contribution for 20,000 hrs $640,000$600,000 The plain saw is more profitable when we consider that number of hours is constraining operations

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2024 SlidePlayer.com Inc. All rights reserved.