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UT Knoxville ACCT 200 - Chapter 11
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ACCT 200 Outline of Last Lecture I Budgeting Basics II Incremental budgeting III Zero Based budgeting IV Standards versus Actuals V Variance analysis Outline of Current Lecture I Costs II Cost Formula III High Low Method IV Contribution Income Statement V Break Even Point VI Target Profit Current Lecture I Costs a Variable cost stay the same on a per unit basis but change in total pending level of production vary in total b Fixed cost stay the same in total fixed in total but change on a per unit basis pending the number of items produced c If fixed costs are 500 000 and we produce 10 000 units then fixed cost per unit is 50 unit d biggest example of fixed cost is depreciation on factory buildings e Mixed cost do not stay the same on either a per unit OR total basis These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute i Have bot a fixed and variable component II Cost Formula a Total Cost Variable Cost unit x units Fixed Cost III High Low Method a Variable cost unit Change in cost Change in volume highest total cost lowest total cost highest units lowest units b Fixed cost in total total cost variable cost IV Contribution Income Statement a Contribution Margin CM contributes to covering fixed cost Once fixed costs are covered the rest is profit b CM income sales variable costs c When comparing income statements Topline number sales revenue is always the same and the bottom line number income from operations is always the same d CM ratio for each dollar increase in sales this amount will go to covering fixed costs and profit e Change in profit change in unit volume x unit CM f V Change in profit change in sales dollars x CM ratio Break Even Point a Break even point 0 profit just enough to cover fixed costs b Break even total fixed costs unit CM c Break even fixed costs in total revenue unit variable cost unit d Helps new companies know how much they need to sell to make a profit VI Target Profit a TP total fixed costs TP unit CM b Slide 15 on Professor Martin s notes is an exam problem

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# UT Knoxville ACCT 200 - Chapter 11

Type: Lecture Note
Pages: 3
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