Contribution margin, CVP, costing systems, and budgeting — the decision math behind managerial accounting.
Absorption costing puts fixed manufacturing overhead into product cost; variable costing expenses it. One dataset, both income statements, reconciled exactly.
Break-even analysis finds the sales level where revenue equals total costs. Both formulas — units and sales dollars — worked through step by step with real numbers.
Contribution margin is revenue minus variable costs. See the total, per-unit, and ratio formulas, a full worked example, and how to use it for product decisions.
Job order costing traces direct materials and labor to each individual job and applies overhead with a predetermined rate. See a full job cost sheet, line by line.
Operating leverage measures how heavily a cost structure leans on fixed costs. Learn the DOL formula and predict profit swings with a two-company worked example.
The predetermined overhead rate is estimated overhead divided by an estimated driver, set before the year starts. Worked example plus the over/underapplied close.
Process costing averages department costs over identical units. See when it fits, how equivalent units work, and a weighted-average example that ties out to the penny.
CVP analysis models how profit responds to price, volume, and cost changes. One business worked end to end: break-even, target profit, margin of safety, a what-if.
A flexible budget restates costs at the volume you actually hit, so comparisons are fair. Worked example with flexible-budget and volume variances that tie exactly.