7-2 The Cash account in the ledger of Haselhof Inc. shows a balance of $48,678.22 at November 30. The bank statement, however, shows a balance of $56,274.20 at the same date. The only reconciling items consist of the followings: The following checks were outstanding at November 30. 1224 1230 $1,635.29 2,468.30 2,125.15 482.17 1232 1233 Included with the November bank statement and not recorded by the company werea bank debit memo for $27.40 covering bank charges for the month, a debit memo for $372.13 fora customer's check returned and marked NSF, and a credit memo for $1,400 representing bond interest collected by the bank in the name of Haselhof Inc. Cash on hand at November 30 recorded and awaiting deposit amounted to $1,915.40. Haselholf has wrongly recorded check # 1220 to purchase office equipment which cleared the bank for $1,300 as $3,100. Prepare the bank reconciliation and the adjusting entries.
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
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