WGU –D196 Principles of Financial and Managerial Accounting
WGU –D196 Principles of Financial and Managerial Accounting the production budget Sales budget + ending finished goods inventory - beginning finished goods inventory direct materials production budget Production budget × direct materials per unit the direct materials purchases budget Direct materials production budget + ending direct materials inventory - beginning direct materials inventory Cash collected from customers (current period revenue × current period collection rate) + cash collected from previous period sales Cash payments to suppliers (current period purchases × current period payment rate) + cash paid on previous period purchases Cost Variance Difference between actual costs and budgeted costs Contribution Margin = Sales Revenue - Variable Costs The difference between total sales and variable costs; the portion of sales revenue available to cover fixed costs and provide a profit. Target Income = Sales Revenue - Variable Costs - Fixed Costs A profit level desired by management. At break-even Target income = 0 Sales Revenue = Sales Price x Number of Units Variable Costs
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