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13 Cards in this Set
- Front
- Back
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A short-term horizon focuses on maximizing |
Contribution margin |
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In the short-term, fixed costs are not |
controllable |
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A long term time horizon focuses on maximizing |
Profit margin |
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We can use more cost pools and different drivers for each pool to account for various kinds of capacity cost and how they behave |
TRUE |
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Contribution margin = |
Revenues - VC
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Profit margin (long-term projection) = |
Contribution margin - allocated capacity (also called fixed costs) |
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Segment margin= |
Contribution margin - traceable fixed costs |
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Gross Margin = |
Revenues - COGS
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Absorption Costing COGS |
DM DL VOH FOH |
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Variable Costing COGS |
DM DL VOH |
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Difference between absorption COGS and variable COGS is |
FOH |
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Reconciling the difference between absorption PBT and variable PBT is |
Difference in dollars = units in ending inventory x FMOH unit cost |
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Why allocate common costs? |
- help make long term decisions - prepare financial statements in accordance to GAAP - influence behavior - shift costs from one product to another to impact reimbursements - sensitize managers to the cost of a resource (IT cost) - encourage managers conform to a corporate goal |
