Blowing Sand Company also has the Blast fan model. It is the company's top-selling model with sales of 30,000 units per year. This model has a dual fan as well as a thermostat component that causes the fan to cycle on and off depending on the room temperature. Blowing Sand has always manufactured the thermostat component but is considering buying the part from a supplier. It costs Blowing Sand $5 to make each thermostat ($2.50 variable and $2.50 fixed). Flurry Co. has offered to sell the component to Blowing Sand for $4. Blowing Sand's decision to purchase the part from Flurry would eliminate all variable costs but none of the fixed costs. Blowing Sand has no other possible uses for the area currently dedicated to the thermostat production Calculate the effect on Blowing Sand total costs if the thermostat is purchased from Flurry Co. Increases by The Total Cost

Q: How do you calculate contribution margin?

A: The contribution margin can be calculated by deducting the variable cost from the sales revenue.

Q: Define cost-volume-profit analysis?

A: Cost-Volume-Profit Analysis (CVP Analysis): CVP Analysis is a tool of cost accounting that measures…

Q: What would be the outputs for the given assumptions:   Total revenue: Total costs: Total profit:

A: Break Even Point is that point at which there is no profit & loss would arise. At break even…

Q: how do I find direct cost per unit

A: Direct Cost A direct cost is a price that is directly associated with the production of particular…

Q: Understand thedifferences between directand indirect costs

A: Cost:   It refers to the economic value incurred by an organization for manufacturing a product or…

Q: A total cost equation can be used to predict future costs for various activity levels. Write the…

A: Concept The total cost is the sum of variable cost and fixed cost incurred For example if variable…

Q: calculate the percentages? And how did you calculate the cumulative costs

A: In Order to calculate the cost associated all the cost that are associated or added up any order to…

Q: What is the Contribution Margin?

A:

Q: What is interpretation of the usefulness of the contribution margin concept?

A: Contribution margin The additional profit gained for each unit sold is calculated by subtracting the…

Q: what is weighted average cost method?

A: The weighted average cost method is one of the methods to ascertain the unit cost of a product. It…

Q: Describe the components of contribution margin.

A: Contribution Margin: Contribution Margin refers to the margin of profit expected by the company. The…

Q: What is a relationship between fixed, variable and semi-variable cost?

A: Cost can be defined as the amount incurred upon the production of goods and services for the final…

Q: How can we calculate the Total Present Cost for the Base Case and Alternative?

A: The question is based on the concept of calculation of cost benefit analysis of base case and…

Q: How is contribution margin calculated?

A: Contribution margin means sales revenue over and above the variable costs of production and selling…

Q: How does the contribution margin affect the cost-volume-profit analysis?

A: Cost Volume Profit analysis means the breakeven analysis which generally used to determine the break…

Q: Describe the concept of the INITIAL DIRECT COSTS?

A: Definition:   Initial direct costs: Initial direct costs refer to the costs that a lessor incurs…

Q: What does the Unit contribution margin express?

A: Break Even Point:                 Break Even Point is defined as the level where there is no profit…

Q: How is cost-volume-profit analysis useful?

A:

Q: Define the following terms: incremental cost, opportunity cost, and sunk cost.

A: Incremental Analysis: Incremental analysis refers to the analysis of differential revenue that could…

Q: What are “initial direct costs” and how are they accountedfor?

A:

Q: What is the equation to find Contribution Margin?

A: Contribution margin:   Contribution margin refers to the process or theory that is used to judge the…

Q: Define sunk cost

A: Companies when making crucial decisions about their operations consider relevant costs i.e. costs…

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.