Accounting Terminology Essay Example for Free

Accounting Terminology Essay Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer â€Å"None† if the statement does not correctly describe any of the terms. a. The level of sales at which revenue exactly equals costs and expenses. Break-even point. b. Costs remain unchanged despite changes in sales volume. Fixed Costs. c. The span over which output is likely to vary and assumptions about cost behavior generally remain valid. Relevant Range. d. Sales revenue less variable costs and expenses. Contribution margin. e. Unit sales price minus variable cost per unit. Unit contribution margin. f. The reduction in unit cost achieved from a higher level of output. Economics of scale. g. Costs the respond to changes in sales volume by less than a proportionate amount. Semi variable costs. h. Operating income less variable costs. â€Å"None†. Exercise 20.7 – Using Cost-Volume-Profit Formulas Exercise 21.2 – Home Depot’s Financial Statements: Incremental, Sunk, and Opportunity Costs Read the footnote in Appendix A referring to Home Depot’s decision to close all of its remaining big box stores in China. Write a short paragraph identifying the incremental, sunk and opportunity costs associated with this decision. Assume that any cost savings will be invested elsewhere in more productive stores. Incremental costs relate to the difference in costs between alternative courses of action and incremental revenues. The incremental costs that would be that would occur from either remodeling or closing Home Depot an existing location would include cost of materials, overhead from the actual physical remodel, labor that includes employee pay for rearranging and moving merchandise during a remodel if it occurred, designing and planning costs. Opportunity costs are important factors when it comes to decision making because they define the costs of taking some action in terms of the value foregone or that’s given up due to a particular action taken place. Opportunity costs of remolding would include profits on lost sales if the store is closed during remodeling, loss of current sales due to decrease in customer traffic (due to excessive noise, smell, dirt and inconveniences. Stores could potentially lose profit if they are not able to stock the full line of products or keep items stocked during a remodel. Whereas a sunk cost is an outlay that has been irrevocably incurred at some time in the past; sunk costs cannot be changed no matter what course of action is taken and are irrelevant for purposes of decision making involving the future. Sunk costs related to either remodeling of the store that would need to be taken into consideration include original costs of the current store (decorations, paint, shelves, displays, carpet) and designs that will need to be replaced or removed during either remodeling or closing. Exercise 21.6 – Incremental Analysis: Make or Buy Decision The cost to Swank Company of manufacturing 15,000 units of a particular part is $135,000, of which $60,000 is fixed and $75,000 is variable. The company can buy the part from an outside supplier for $6 per unit. Fixed costs will remain the  same regardless of Swank’s decision. Should the company buy the part or continue to manufacture it? Prepare a comparative schedule in the format illustrated in Exhibit 21-6. It would be more beneficial for the company to manufacture the part rather than buy it from an outside provider. Brief Exercise 22.9 – Flows of Costs through Manufacturing Accounts The President of Cold Moo Ice Cream Company, a chain of ice cream stores in the Midwest, was unhappy with the actual six-month profit figures for the  company recently prepared by the CFO. The president asked the CFO for a profit breakdown, by store, of the actual six-month results. When the President received the report, he was extremely upset and called the CFO, into his office. The President stated, â€Å"These reports show that each store in the chain is profitable, but our company results are unprofitable! How can this be?† The CFO pointed out that each store was allowed to set prices for ice cream based on its cost structure. However, the stores’ cost structures did not include headquarters costs of the costs of advertising and delivery of products. What are the three characteristics for operating a successful responsibility accounting system? Consider whether the accounting system at Cold Moo Ice Cream Company includes the three characteristics of a successful responsibility accounting system. How could the responsibility accounting system at Cold Moo be improved? As the Textbook states, â€Å"measuring performance along the lines of management responsibility is an important function. A responsibility accounting system holds individual managers accountable for the performance of the business centers under their control and provides top management with information useful in identifying strengths and weaknesses among units throughout the organization.† The three characteristics of a successful operating accounting system will include budgets, will measure the performance, and contain timely performance reports. â€Å"Budgets serve as performance targets for each subunit in an organization. The accounting system will measure the performance of each responsibility center, and timely performance reports are prepared that compare the actual performance of each center with the amounts budgeted.† When reports are preformed frequently, it allows center managers to be able to keep their performances on target, and helps with the evaluation of the managers. It does not appear hat Cold Moo Ice Cream is following the timely reports method of the accounting system, which is essential to ensuring the financial information is accurate as possible, and to improve this aspect should be more intertwined with the actual budget and more accurately present how the performance of the store is measured. To do so the responsibility income statement should also be presented, this  contains not only the operating results of a particular part of a business but also the revenue and expenses of each profit center within that part, which could be extremely important to see how those centers within the same area measure and stack up against one another. For the responsibility income statement to be informative and useful it should essentially and efficiently be able to detail Variable Costs, Contribution Margin, Fixed Costs, Traceable Fixed Costs and Common Fixed Costs. In addition, fixed costs that are common to both product lines amount to $125,000.00. Instructions a. Prepare Chocolatiers’ responsibility income statement for the current month. Report the responsibility margin for each product line and income from operations for the company as a whole. Also include columns showing all dollar amounts as percentages of sales. b. According to the analysis performed in part a, which product line is more profitable? Should the common fixed costs be considered when determining the profitability of individual product lines? Why or why not? According the analysis in part a, the solid product line is more profitable. When determining profitability of any product line, common fixed costs should not be considered. Only the costs that are directly traceable to the product lines should be included. Common fixed costs are not directly traceable to any product, as they are arbitrarily allocated in proportion to a chosen factor, for example, machine hour or square feet of a certain space occupied. c. Chocolatiers has $15,000.00 to be used in advertising for one of the two product lines and expects that the expenditure will result in additional sales of $50,000.00. How should the company decide which product line to advertise? The effects of this campaign will typically be in both sales and variable costs, and therefore the company should select the product line based on which product will have the highest contribution margin ratio, which is the  percentage of sales, service revenues or selling price that remains after all variable costs and variable expenses have been covered. This method takes into consideration the limited time frame of the advertising campaign, where fixed costs will most likely not be affected.

Lenin And Problems After The October Revolution Essay -- History Histo

Lenin and Problems After the October Revolution   Ã‚  Ã‚  Ã‚  Ã‚  The initial difficulties faced by the new Soviet Union were to severe that its survival seemed almost miraculous. The remains of the czarist regime left Lenin to face a country wrought with war, devastated economically. Russia's involvement in World War I, followed by its Civil War, wide spread famine and a change in political and social ideology were the problems confronting Lenin after the October Revolution. Lenin did succeed in ending both the war with Germany and the Civil War for Russia. Yet, the economic and social aspects of the revolution can be more critically assessed.   Ã‚  Ã‚  Ã‚  Ã‚  Lenin knew the importance of ending Russian involvement in World War I. On March 3, 1918 Russia lost 1/3 of its fertile farm lands, 1/3 of its population, 2/3 of its coal mines and oil fields and 1/2 of its heavy industry to German peace terms. Though the treaty of Brest-Litovsk was harsh, the terms were annulled once the Allied powers defeated Germany. Lenin managed to end the war that had for so long depressed Russia's resources and morale. He succeeded in focusing on the severe internal problems of the new government, and in â€Å" saving the socialist republic† . One of the largest problems that Russia faced prior to the October Revolution was finally ended, though its effects were still to be felt.   Ã‚  Ã‚  Ã‚  Ã‚  Almost immediately afterwards, in 1918, Civil War begins. The battling White Army divided amongst different leader...

Chef’s Toolkit

Case #2 Chef’s Toolkit – Case Anaylsis De? ne the Issues Chef’s Toolkit has exhausted all of their ? nancial resources trying to develop their product. The owner, Peter Jeffery, is seeking external investment to fund the launch of his product, and the potential investor, Dale Reid, has asked for projected ? nancial statements for the company’s pessimistic, expected, and optimistic projected sales for the ? rst year of operation ending July 30, 1995. Analyzing the Case Data Fragmented information was given in the case, along with a balance sheet and a production schedule for the expected sales of 10,000 units.There was no statement of cash ? ows, income statement or any information about their cash account or their accounts payable account. Generating Alternatives Dale Reid could choose to either invest $85,000 for 50% of the company, choose to invest more or less for a negotiated percentage of the company, or not invest in Chef’s Toolkit. The pessim istic projected sales is 5,000 units per month, totaling 60,000 units in the year. The expected amount of sales is 10,000 units, summing to 120,000 units per year.The optimistic projected sales is 30,000 units per month resulting in a total of 360,000 units sold in the year. In the optimistic option, a double mold is needed since the total required production exceeds the maximum amount for the single mold. Selecting Decision Criteria †¢ Low additional investment †¢ High revenues with low expenses †¢ Return on Investment †¢ Break Even Analysis Analyzing and evaluating alternatives Break Even = Revenues – Expenses = 0 Single Mold = x(1. 82) – x(1. 215) – x(0. 162) – 63,975 63,975 = x(0. 43) 144,413 = Break even units/year Single Mold (pessimistic and expected) = 12,035 units/month Double Mold = x(1. 82) – x[(1. 215+0. 865)/2] – x[(0. 144+0. 062)/2] – 125,975 125,975 = x(0. 677) 186,078 = Break even units/year Double Mold (optimistic) = 15,507 units/month Chef’s Toolkit – Case Analysis 1 Case #2 Chef’s Toolkit – Case Analysis ROI = (Cash in? ow-Cost of investment)/Cost of investment Pessimistic (-41,711-54,894)/54,894 = – 176% Expected (-4,791-36,724)/36724 = -113% Optimistic (194,983. 20-6,046. 70)/6,046. 70 = 3125%Both the pessimistic and expected sales forecasting show that with an investment well under the proposed $85,000 is required, a negative return of investment is expected. Also, according to break-even analysis operating with the single mold and excluding warehousing costs, a minimum of 12,035 units must be sold to break even. Under a similar situation with the double mold, 15,507 units must be sold to break even, which is about half of the optimistic sales projection. Also under the optimistic sales projection, a positive return on investment is expected.Because the company is turning pro? t,less additional investment is required. Additionally under the pessimistic and expected situation, the company turns losses, and under the optimistic projections, Chef’s Toolkit only has a net income of 13% of its revenues. Selecting Preferred alternative According to the above information and the projected pro-forma statements, Dale Reid should not invest his money in the company. The company’s lack of current assets, high expenses and low per-unit revenue create an unfortunate and unpro? able investment in pessimistic and expected situations. Only in the optimistic production and sales does the company begin to turn pro? t, but this pro? t is low. Chef’s Toolkit needs desperate restructuring and additional revenue sources before Dale Reid should invest. Developing and Implementing the Plan To reduce production costs, Chef’s Toolkit should look into ? nding less expensive producers and packagers. They should also look into additional revenue streams or ? nding a way to retail their product directly to the custo mer to take out the middleman.This would increase their revenue per unit signi? cantly. Chef’s Toolkit can explore online retailing since they essentially don’t have any sort of bricks-and-mortar store front, so it would ? ow with their current business model. Also, if they aim to sell 13,500 units per month, they will turn pro? ts (see break-even analysis-single mold) and not require a double mold since they will produce and sell a total of 162,000 units (the max for the single mold) within the ? rst year.However, presently Peter Jeffery and his wife have exhausted all of the company’s assets as well as substantial amount of their personal assets. The risk in their current situation is high and they need immediate revenue to start recouping their research and development costs. They also need money to even start producing the product so that they can sell it. This should be brought up in their discussion with Dale Reid, and hopefully Peter can persuade him to i nvest despite the bleak pro-forma ? nancials. Chef’s Toolkit – Case Analysis 2

The Effects Of Ocean Pollution On The Marine Ecosystem

Ocean pollution comes in many forms with each having some sort of effect on the marine ecosystem. Ocean pollution is destroying earth s waters, because its killing populations of organisms in the water all over the ocean, Its destroying coral reefs and water is being contaminated with oil,garbage and chemicals.Which in turn is destroying organisms all over the ocean. For the purpose of this paper, it will be logical to categorize these pollutants into three main areas; garbage, chemical, and noise pollution. When thinking about these topics it is not only important to look at the devastation that it brings to sea life, but also how it impacts human and animal life as well. The most obvious pollutant comes in the form of garbage. Garbage is a visible source that we can see floating on the water’s surface. Among the garbage, plastic appears to be the most harmful to marine life. There is an average of 13,000 pieces of plastic litter scattered around every square kilometer of the ocean. An average of 6.4 million tons of marine litter reaches the oceans every year according to the United Nations Environment Programme (UNEP). At this rate scientists predict a bleak future for the oceans which are a vital to our planet s existence. Once garbage whether plastic or not reaches the oceans, the currents take it many miles off shore. The place it ends up is a place that is termed an oceanic desert. The scientific name is gyre. A gyre is a slowly moving, clockwise spiral ofShow MoreRelatedThe Effects Of Ocean Pollution On The Marine Ecosystem And Animals1376 Words   |  6 PagesThe earth’s greatest mass is the ocean, which is seventy percent and holds 1.3 billion cubic km of water. Being the biggest mass on this earth, eighty percent of the world gather their food from the ocean. Along with the eighty percent, one-fourth to one-third of the food we catch from the ocean is also to feed other animals as well. 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