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Margin of safety
Measures the sensitivity of budgeted sales volume compared with break-even sales volume. The difference between level of sales activity achieved and level of sales activity required to break-even in absolute or percentage terms.
Margin of safety (units)= Budgeted sales volume less Break-even sales volume
Margin of safety (%)= (Budgeted sales less Break-even sales volume/ Budgeted sales volume) x 100 Number of units sold to achieve a target profit= (Fixed cost + Target profit)/Contribution per unit
meaning and scope of cost accounting
This is defined as an actual amount paid or incurred, as opposed to estimated cost or standard cost. In contracting, actual costs amount includes direct labor, direct material, and
Reasons for Cost Allocation 1. To provide comparison along with externally provided services: It helps in assessing where to continue the contact or service outsiders. 2.
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Material Costs Material refers to each physical input into the production procedure. They involve the giving as: Raw material refers to bought in material that is used
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