Table of Contents
Introduction to Accounting I An Interactive Case Approach
Assignment Due Today
Today’s In-Class Activities
Contribution Margin ( x = # units sold)
Contribution Margin Ratio (CMR)
PPT Slide
Contribution Margin Ratio (CMR)
For Each Sales Dollar
Fixed expenses
Contribution Income Statement ( x = # units sold)
What industries have high contribution margins?
What industries have low contribution margins?
Breakeven Sales
Contribution I/S at Breakeven
How many units (X) do we need to sell to breakeven?
How many books must we sell to breakeven?
Alternate computation of Breakeven Sales Dollars
Proof of Breakeven ( 360 books sold)
More comments on CM
PPT Slide
Proof
Alternatively, we can use the CMR
PPT Slide
Corliss Accounting Firm
PPT Slide
Gather Information!
PPT Slide
Contribution Margin Ratio (CMR)
Contribution Margin Ratio (CMR)
Return on Equity
Return on Equity (cont.)
Assignment for Next Time
Suppose that John the Painter is thinking about continuing his business next summer and wants to prepare a budget of expected results for next year. Knowledge of expense (cost) behavior is important.
Objective of Case #2-3 “The J & J Partnership”
PPT Slide
PPT Slide
ESTIMATING MIXED EXPENSE (High-Low Method)
PPT Slide
PPT Slide
Expected August Utility Expense
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