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(WIP) ACC 350 Exam 1 Study Material

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○ = operating income /

○ = operating income / revenues 32. Steps: Pg. 23 Sarah Allison Takash ACC 350, Spring 2018 Exam 1 Study Material a. Determine ​total product​ revenues​ ​attributable to the particular product i. = “net sales” ii. = price * qty sold - returns and sales allowances b. Determine the ​total ​product-cost i. = Cost of all value chain activities associated with providing the product ii. = COGS + indirect/period/SG&A costs allocated to the product iii. = COGS + operating costs ---- (on income statement) c. Using (a) and (b), Determine ​the product’s ​operating income​: i. Subtract total product-cost from total product-revenues to get the product’s operating income ii. = (product-operating income) = (total product-revenue) - (total product-cost) d. Divide total revenues (step a) by operating income (step b) i. = (Total product-revenue) ​/​ (product-operating income) e. Multiply by 100 to ​get a %​ → this is your​ operating profit margin Example Problem from textbook:

Pg. 24 Sarah Allison Takash ACC 350, Spring 2018 Exam 1 Study Material Solution on p. 178 of textbook Determining the profitability of customers Summary: Same as for determining profitability of products, except use customer related revenues and customer related costs instead of product related revenues and product-costs. Blackboard Problems: