Business Administration 2257 Chapter Notes - Chapter 1: Fixed Cost, Variable Cost, Income Statement

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Eleni Petrou

Document Summary

Outline: cost classification, contribution analysis, breakeven analysis, using cost behavior for risk assessment, summary. What is a cost: goods or services used to generate revenue, costs are recurring. What is an investment: an investment benefits many periods (only a portion of amount is a cost, one-time flow. Utilities: step costs, do not change in direct proportion with changes in volume, but change in large amounts at distinct volumes, viewed as fixed coss within a narrow relevant range, e. g. Production supervisor, if a second shift is added. Income statement on a contribution basis: net sales, less: variable costs, = contribution, less: fixed costs, = income from operations. Income statement from product and period costs: net sales, less: cogs, = gross profit, less: operating expenses, = income from operations. Contribution margin rate: (cid:1847)(cid:1866)(cid:1872) (cid:1829)(cid:1867)(cid:1866)(cid:1872)(cid:1870)(cid:1854)(cid:1873)(cid:1872)(cid:1867)(cid:1866) = (cid:1845)(cid:1857)(cid:1864)(cid:1864)(cid:1866) (cid:1842)(cid:1870)(cid:1855)(cid:1857) (cid:1848)(cid:1853)(cid:1870)(cid:1853)(cid:1854)(cid:1864)(cid:1857) (cid:1829)(cid:1867)(cid:1871)(cid:1872)/(cid:1873)(cid:1866)(cid:1872, (cid:1829)(cid:1867)(cid:1866)(cid:1872)(cid:1870)(cid:1854)(cid:1873)(cid:1872)(cid:1867)(cid:1866) (cid:1853)(cid:1870)(cid:1866) (cid:1844)(cid:1853)(cid:1872)(cid:1857)=(cid:3022)(cid:3041)(cid:3036)(cid:3047) (cid:3004)(cid:3042)(cid:3041)(cid:3047)(cid:3045)(cid:3036)(cid:3029)(cid:3048)(cid:3047)(cid:3036)(cid:3042)(cid:3041) (cid:3020)(cid:3032)(cid:3039)(cid:3039)(cid:3036)(cid:3041)(cid:3034) (cid:3017)(cid:3045)(cid:3036)(cid:3030)(cid:3032)