TAILIEUCHUNG - Lecture Survey of accounting (4/e) - Chapter 11: Cost behavior, operating leverage, and profitability analysis

In this chapter, you will be able to: Identify and describe fixed, variable, and mixed cost behavior; demonstrate the effects of operating leverage on profitability; prepare an income statement using the contribution margin approach;. | Chapter Eleven Cost Behavior, Operating Leverage, and Profitability Analysis © 2015 McGraw-Hill Education. 1 Fixed Cost Behavior Consider the following concert example where the band will be paid $48,000 regardless of the number of tickets sold. When activity . . . . 11-2 2 Fixed Cost Behavior $48,000 ÷ 3,000 Tickets = $ per Ticket 11-3 3 Operating Leverage A measure of the extent to which fixed costs are being used in an organization. Operating leverage is greatest in companies that have a high proportion of fixed costs in relation to variable costs. Consider the following concert example where all costs are fixed. Fixed Costs Small percentage change in revenue Large percentage change in profits 11-4 4 Operating Leverage When all costs are fixed, every additional sales dollar contributes one dollar to gross profit. 10% Revenue Increase 90% Gross Profit Increase 11-5 5 Shifting the cost structure from fixed to variable not only reduces risk but also the potential for profits. .

• Kế toán - Kiểm toán
• Survey of accounting
• Lecture Survey of accounting
• Cost behavior
• Operating leverage
• Profitability analysis
• Accounting for cash
• Accounting cycle
• Financial resources
• Accounting provides information
• Internal controls
• Accounting profession
• Accounting for receivables
• Inventory cost flow
• Accounting for liabilities
• Bonds issued
• Managerial accounting
• Product costing
• Financial statements
• Ledger accounts
• Merchandising businesses
• Transportation costs
• Long term operational assets
• Depreciation method