New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Managerial Accounting

by: Morris Beer II

Managerial Accounting ACCT 2301

Marketplace > Texas Tech University > Accounting > ACCT 2301 > Managerial Accounting
Morris Beer II
GPA 3.94


Almost Ready


These notes were just uploaded, and will be ready to view shortly.

Purchase these notes here, or revisit this page.

Either way, we'll remind you when they're ready :)

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Class Notes
25 ?




Popular in Course

Popular in Accounting

This 22 page Class Notes was uploaded by Morris Beer II on Thursday October 22, 2015. The Class Notes belongs to ACCT 2301 at Texas Tech University taught by Bigbee in Fall. Since its upload, it has received 35 views. For similar materials see /class/226438/acct-2301-texas-tech-university in Accounting at Texas Tech University.


Reviews for Managerial Accounting


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 10/22/15
Chapter Three Cost Volume Profit Analysis Contribution Margin CM Revenue Variable Costs CM represents the amount available to cover fixed expenses and thereafter provides profits CM can be calculated in total or per unit Contribution Margin Income Statement Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income When using this format costs include product as well as period costs Sharon Virgil owns a delivery service company She charges customers 10 per delivery The company s variable expenses average 2 per delivery and fixed costs are 600 per month Sharon provided 100 deliveries during January Con rribu rion Margin Income S ra remen r Revenue 1000 Variable Costs 200 Contribution Margin 800 Fixed Costs 600 Net Income 200 Measuring Operating Leverage Using Contribution Margin Operating Leverage Contribution Marqin Net Income OL 800 200 4 What does this 4 tell us If you take the 0L and multiply it by the increase in sales it gives you the increase in net income Let s say deliveries increase 10 for February 4 10 40 in net income Let s test our theory In February sales increased by 10 100 deliveries 110 110 deliveries Revenue 1100 Variable Costs 220 Contribution Margin 880 Fixed Costs 600 Net Income 280 Sharon made 10 more deliveries in February Sales rose from 1000 to 1100 This is a 10 increase Net income rose from 200 to 280 This is a 40 increase change 280 200 80 80 200 40 BreakEven Point j v Use CM income statement to calculate the Breakeven pomt Point where Total Revenue Total Costs Once fixed costs havebeen covered net income Nill Increase per unIt contribution margin for each addItIonal unit sold Example Green Company plans to sell 1000 mowers at 400 each in the coming year Product costs include 0 Direct materials per mower 180 0 Direct labor per mower 100 0 Variable overhead per mower 25 0 Total fixed factory overhead 15000 Variable selling expense is a commission of 20 per mower fixed selling and administrative expense totals 30000 CVP Analysis What happens to the breakeven point if Green Company lowers fixed costs to 35000 What happens to the breakeven point if Green Company lowers variable costs to 275 per mower Variable Cost Ratio amp Contribution Margin Ratio VC Ratio VC expressed as of sales dollars CM Ratio CM expressed as of sales dollars VC Ratio CM Ratio 100 Variable Cost Ratio Variable Cost Variable Cost Ratio Sales Variable Cost 325 Ratio 400 Variable Cost 8125 Ratio Contribution Margin Ratio Contribution Margin permit Sales 39 Variable Cost 400 325 Contribution Margin per unit 75 per unit Contribution Contribution Margin Margin Ratio Sales Contribution Mar in Ratio 18750 9 400 Ratios can be used to calculate Breakeven Point Example CM Ratio 1875 Sales VC CM FC Operating Income 1875X 45000 0 1875X 45000 X 450001875 X 240000 Margin of Safety The units sold or revenue earned above the breakeven volume Wiggle room Actual or Target Sales Breakeven Sales Example Green Company Breakeven Point 600 units or 240000 sales dollars Target Point 1000 units or 400000 sales dollars Margin of Safety Units 1000 600 400 units Sales dollars 400000 240000 160000 What happens if a company sells more than one product Green Company Decides to offer two models of lawn mowers mulching mower SP 400 amp riding lawn mower SP 800 Mulching Riding Mower Total Mower 800 units 1200 units Sales 480000 640000 1120000 Less Variable Expenses 390000 480000 870000 Contribution Margin 90000 160000 250000 Less Fixed expenses 30000 40000 70000 Product Margin 60000 120000 180000 Less Common fixed 26250 expenses Operating Income 153750 WeightedAverage ContribUtiOh Margin per Unit In the real world a company is selling more than one product Have to find weightaverage contribution margin Step 1 Find the CM per unit for each Mulching Mower 400 325 75 Riding Mower 800 600 200 Step 2 Find sales mix for each Sales Mix sold total sold Mulching Mower 1200 2000 60 Riding Mower 800 2000 40 Step 3 Multiply CM by sales mix Mulching Mower 75 60 45 Riding Mower 200 40 80 Step 4 Add weighted CMs together for total weightedaverage CM 45 80 125 Use 125 to find breakeven point for company 125X 70000 26250 0 125X 96250 X 770 units How many mulching mowers 770 60 462 How many riding mowers 770 40 308


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Allison Fischer University of Alabama

"I signed up to be an Elite Notetaker with 2 of my sorority sisters this semester. We just posted our notes weekly and were each making over $600 per month. I LOVE StudySoup!"

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.