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Cost-Volume-Profit Analysis (CVP)

Contribution Margin

Contribution Margin Per Unit

Contribution Margin Ratio (CMR)

Technique that examines changes in profits in response to cha…

Total Revenue - Variable Costs

Selling price per unit - Variable cost per unit

Percentage by which the selling price (or revenue) per unit e…

Cost-Volume-Profit Analysis (CVP)

Technique that examines changes in profits in response to cha…

Contribution Margin

Total Revenue - Variable Costs

Contribution Margin

Unit Contribution Margin

Contribution Margin Ratio

Sales Volume (Units)

Sales Revenue-Total Variable Costs

Unit Sales Price-Variable Costs per Unit

Unit Sales Price-Variable Costs Per Unit/Unit Sales Price

Fixed Costs+Target Operating Income/Unit Contribution Margin

Contribution Margin

Sales Revenue-Total Variable Costs

Unit Contribution Margin

Unit Sales Price-Variable Costs per Unit

Activity index

Break-even point

Contribution margin (CM)

Contribution margin ratio

The activity that causes changes in the behavior of costs.

The level of activity at which total revenues equal total cos…

The amount of revenue remaining after deucting variable costs.

the percentage of each dollar of sales that is available to a…

Activity index

The activity that causes changes in the behavior of costs.

Break-even point

The level of activity at which total revenues equal total cos…

Give examples of Fixed and Variable co…

What is the Contribution Margin (CM) f…

What is the Unit Contribution Margin (…

What is the Contribution Margin Ratio…

Fixed Costs = R&D, plant depreciation, plant manager salary,…

Contribution Margin Formula =... Revenue - Variable Costs

Unit Contribution Margin =... Selling Price per Unit - Variable…

Contribution Margin Ratio =... CM / Revenue or UCM / Price

Give examples of Fixed and Variable co…

Fixed Costs = R&D, plant depreciation, plant manager salary,…

What is the Contribution Margin (CM) f…

Contribution Margin Formula =... Revenue - Variable Costs

break-even point

common fixed expense

contribution margin

contribution margin income statement

The break-even point is the point where total revenue equals…

are the fixed costs that are not traceable to the segments an…

is the difference between sales and variable expense. It is t…

Sale... (Total variable cost)(variable selling and administrativ…

break-even point

The break-even point is the point where total revenue equals…

common fixed expense

are the fixed costs that are not traceable to the segments an…

Cost Volume Profit (CVP) Analysis

Relevant Range of Operations

Fixed Costs

Variable Costs

Helps mangers predict how changes in costs and sales levels a…

The normal operating range for a business

Change in proportion to changes in the volume of activity

Change in Proportion to changes in the volume of activity

Cost Volume Profit (CVP) Analysis

Helps mangers predict how changes in costs and sales levels a…

Relevant Range of Operations

The normal operating range for a business

Cost Volume Profit Analysis

Components of CVP Analysis

CVP assumptions

contribution margin ratio

-powerful tool that helps managers make important business de…

CVP analysis relies on the interdependence of five components…

1. only a change in volume affects costs ... 2. managers can cla…

percentage of each sales dollar that is available for coverin…

Cost Volume Profit Analysis

-powerful tool that helps managers make important business de…

Components of CVP Analysis

CVP analysis relies on the interdependence of five components…

Purpose of CVP Analysis

Contribution Margin

Break-Even Point

CVP Relationships in Equation Form

Estimate how profits are affected by: Selling prices, Sales V…

The amount remaining from sales revenue after variable expens…

The level of sales at which profit is zero

Profit = (Sales-Variable Expenses) - Fixed Expenses... Profit =…

Purpose of CVP Analysis

Estimate how profits are affected by: Selling prices, Sales V…

Contribution Margin

The amount remaining from sales revenue after variable expens…

Define total costs

Give examples of fixed costs

What are stepped fixed costs?

Define variable costs

Total Costs = Fixed Costs + Variable Costs

- Rent... - Insurance... - Cleaning Costs... - Staff Salaries

- These are fixed costs that reflect large changes in volume…

Costs that are zero when output is zero... Examples (for a hair…

Define total costs

Total Costs = Fixed Costs + Variable Costs

Give examples of fixed costs

- Rent... - Insurance... - Cleaning Costs... - Staff Salaries

Variable cost

Fixed cost

Mixed cost

High low method

Cost that increases or decreases in total in direct proportio…

A cost that remains the same in total regardless of changes o…

A cost that has both fixed and variable components

A method used to separate mixed costs into their into their v…

Variable cost

Cost that increases or decreases in total in direct proportio…

Fixed cost

A cost that remains the same in total regardless of changes o…

Cost-volume-profit analysis:

Marginal costing:

Marginal costing VS absorption costing:

Contribution (CPU),... Break even point (…

The study of the relationship between costs and volume(level…

- Is a decision making approach in which marginal costs are u…

MARGINAL... - divides costs into variable and fixed.... - costs are…

-CONTRIBUTION = Sales - Variable costs... This is the amount of…

Cost-volume-profit analysis:

The study of the relationship between costs and volume(level…

Marginal costing:

- Is a decision making approach in which marginal costs are u…

+ Management planning and control cycle

+ Production standards

+ Cost classification

+ Cost behaviour

- Planning ... - Managing } Decision making... - Controlling

The expected or allowed times and costs to make a product or…

1. Cost behaviour... 2. Cost assignment... 3. Product costing... 4. Ti…

- Variable cost... - Fixed cost... - Mixed cost

+ Management planning and control cycle

- Planning ... - Managing } Decision making... - Controlling

+ Production standards

The expected or allowed times and costs to make a product or…

Activity index

Break-even point

Contribution margin (CM)

Contribution margin per unit

The activity that causes changes in the behavior of costs.

The level of activity at which total revenues equal total cos…

The amount of revenue remaining after deducting variable costs.

The amount of revenue remaining per unit after deducting vari…

Activity index

The activity that causes changes in the behavior of costs.

Break-even point

The level of activity at which total revenues equal total cos…

Breakeven Point

Contribution Margin

Contribution Margin Income Statement

Contribution Margin Per Unit

The sales level at which operating income is zero. Total reve…

Sales Revenue mine variable expenses

An income statement that groups costs by behavior rather than…

The excess of the unit sales price over the variable cost per…

Breakeven Point

The sales level at which operating income is zero. Total reve…

Contribution Margin

Sales Revenue mine variable expenses

break-even point

common fixed expense

contribution margin

contribution margin income statement

The break-even point is the point where total revenue equals…

are the fixed costs that are not traceable to the segments an…

is the difference between sales and variable expense. It is t…

Sale... (Total variable cost)(variable selling and administrativ…

break-even point

The break-even point is the point where total revenue equals…

common fixed expense

are the fixed costs that are not traceable to the segments an…

Contribution Margin

Unit Contribution Margin

Contribution Margin Ratio

Sales Volume (in units)

Sales Revenue - Total Variable Costs

Unit Sales Price - Variable Cost per Unit

Unit Sales Price - Variable Costs per Unit... ------------------…

Fixed Costs + Target Operating Income... -----------------------…

Contribution Margin

Sales Revenue - Total Variable Costs

Unit Contribution Margin

Unit Sales Price - Variable Cost per Unit

Breakeven point (BEP)

Capital intensive companies

Contribution statement of comprehensiv…

Contribution margin (CM)

Quantity of output at which total revenues and total costs ar…

Companies with a high percentage of fixed costs in their cost…

Income statement that groups line items by cost-behaviour pat…

Revenues minus all costs of the output that vary with respect…

Breakeven point (BEP)

Quantity of output at which total revenues and total costs ar…

Capital intensive companies

Companies with a high percentage of fixed costs in their cost…

Break-Even Point 73

Choice Criterion 90

Contribution Income Statement 69

Contribution Margin 68

The quantity of output sold at which total revenues equal tot…

An objective that can be quantified, such as maximize income…

Groups cost into variable costs and fixed costs to highlight…

The Difference between total revenues and total variable costs

Break-Even Point 73

The quantity of output sold at which total revenues equal tot…

Choice Criterion 90

An objective that can be quantified, such as maximize income…

CVP Analysis

Profit Equation

Total Revenue

Total Cost

Explores the relationship between revenue, cost, and volume a…

Operating Profit = Total Revenues - Total Cost

= Avg. Selling Price (P) x Units of output produced and sold…

= [Variable Cost Per unit (V) x Units of output(X)] + Fixed c…

CVP Analysis

Explores the relationship between revenue, cost, and volume a…

Profit Equation

Operating Profit = Total Revenues - Total Cost

Cost Behavior

Activity Base

Relevant Range

Variable Costs

The manner in which a cost changes as a related activity chan…

The activity that causes the cost to change

The range of activity over which the changes in the cost are…

Costs that vary in proportion to changes in the activity base

Cost Behavior

The manner in which a cost changes as a related activity chan…

Activity Base

The activity that causes the cost to change

Costs that vary in total in direct pro…

Which of the following is not an examp…

Which of the following costs is an exa…

Use the following information to deter…

variable... Feedback: Variable costs remain constant per unit b…

supervisor salary... Feedback: Supervisor salary is a fixed cos…

factory rent... Feedback: Factory rent does not change based on…

$8.50... Feedback: Variable cost per unit is calculated as tota…

Costs that vary in total in direct pro…

variable... Feedback: Variable costs remain constant per unit b…

Which of the following is not an examp…

supervisor salary... Feedback: Supervisor salary is a fixed cos…

Break-even units

Break-even Dollars

Contribution margin ratio

Break-even point

Fixed costs/Contribution margin per unit

Fixed costs/Contribution margin ratio

Percent left from sales after direct costs deducted

The level of sales at which the contribution margin just cove…

Break-even units

Fixed costs/Contribution margin per unit

Break-even Dollars

Fixed costs/Contribution margin ratio

The amount left from each sale after v…

The minimum quantity of sales which an…

Total revenue -total variable cost or…

total revenue -variable costs - fixed…

Contribution Margin

Breakeven

Total contribution margin formula

Profit formula

The amount left from each sale after v…

Contribution Margin

The minimum quantity of sales which an…

Breakeven

Cost Value Analysis

Break Even Point

Contribution Margin income statement

Contribution Margin

Estimates how changes in costs , sales volume , and price aff…

The Point where total revenue equals total cost. ... Total fixed…

The income statement format that is based on the separation o…

The difference between sales and variable expense. ... sales - t…

Cost Value Analysis

Estimates how changes in costs , sales volume , and price aff…

Break Even Point

The Point where total revenue equals total cost. ... Total fixed…

Break-Even Point

Contribution margin ration (CM ratio)

Cost-Volume-Profit (CVP) graph

Degree of Operating Leverage

The level of sales at which profit is zero

A ratio computed by dividing contribution margin by dollar sa…

A graphical representation of the relationships between an or…

A measure, at a given level of sales, of how a percentage cha…

Break-Even Point

The level of sales at which profit is zero

Contribution margin ration (CM ratio)

A ratio computed by dividing contribution margin by dollar sa…

Contribution Margin (CM) is

The contribution margin ratio is

At the break-even point

Profits =

- the amount remaining from sales revenue after variable expe…

we can use the below formula on the base of total or unit.…

profits equal zero.

Sales - (Variable expenses + Fixed expenses)

Contribution Margin (CM) is

- the amount remaining from sales revenue after variable expe…

The contribution margin ratio is

we can use the below formula on the base of total or unit.…

Fixed cost

Unit sold

Selling price

Variable cost

Selling price - variable cost

(Fixed cost / selling price) - variable cost

(fixed cost / unit sold) + variable cost

Selling price - (fixed cost / unit sold)

Fixed cost

Selling price - variable cost

Unit sold

(Fixed cost / selling price) - variable cost

Cost-volume-profit (CVP) analysis

Operating profit

Contribution margin

Contribution margin ratio (CMR)

method for analyzing how various operating and marketing deci…

Sales - Total Cost... Sales - VC - FC... (Units sold x selling pr…

per unit (UCM) = p - v (price - VC/unit)... total (TCM) = (p -…

(p - v)/p (unit contribution margin/unit price)... bigger is be…

Cost-volume-profit (CVP) analysis

method for analyzing how various operating and marketing deci…

Operating profit

Sales - Total Cost... Sales - VC - FC... (Units sold x selling pr…

Company A sells its product for $10 pe…

Company A has sales of $500,000, varia…

CVP is the acronym for ________ - ____…

Place the following items in the order…

40,000 units and $400,000... $200,000/5 = 40,000... 40,000 x $10…

Company A's contribution margin equals the fixed costs.... Comp…

cost, volume, profit

Variable Costs... Fixed Expenses... Net Income

Company A sells its product for $10 pe…

40,000 units and $400,000... $200,000/5 = 40,000... 40,000 x $10…

Company A has sales of $500,000, varia…

Company A's contribution margin equals the fixed costs.... Comp…

Activity index

Break-even point

Contribution margin (CM)

Contribution margin per unit

The activity that causes changes in the behavior of costs.

The level of activity at which total revenues equal total cos…

The amount of revenue remaining after deducting variable costs.

The amount of revenue remaining per unit after deducting vari…

Activity index

The activity that causes changes in the behavior of costs.

Break-even point

The level of activity at which total revenues equal total cos…

Cost-Volume Profit (CVP) analysis

The Four elements of CVP

CVP analysis is used in these business…

Basic elements of a CVP analysis:

*is one of the most powerful tools that managers have at thei…

1. Prices of products... 2. Volume or level of activity... 3. Per u…

1. Deciding what products and services to offer.... 2. Determini…

1. Break-Even calculations... 2. Target Profit analysis... 3. Margi…

Cost-Volume Profit (CVP) analysis

*is one of the most powerful tools that managers have at thei…

The Four elements of CVP

1. Prices of products... 2. Volume or level of activity... 3. Per u…

Summary of Important Equations

Sales revenue

Operating income

Break-even point in units

1. Sales revenue ... 2. Operating income... 3. Break-even point in…

Price × Units sold

(Price × Units) - (Unit variable cost × Units) - Fixed cost

Fixed cost/(Price - Unit variable cost)

Summary of Important Equations

1. Sales revenue ... 2. Operating income... 3. Break-even point in…

Sales revenue

Price × Units sold

Variable Costs

Fixed Costs

Mixed Costs

High Low Method

Remain constant per unit but changes in total proportionally…

Remain constant in total but per unit, they are inversely rel…

Contain components of fixed costs and variable costs.

A way of separating mixed costs into variable and fixed compo…

Variable Costs

Remain constant per unit but changes in total proportionally…

Fixed Costs

Remain constant in total but per unit, they are inversely rel…

break-even point

common fixed expense

contribution margin

contribution margin income statement

The break-even point is the point where total revenue equals…

are the fixed costs that are not traceable to the segments an…

is the difference between sales and variable expense. It is t…

Sale... (Total variable cost)(variable selling and administrativ…

break-even point

The break-even point is the point where total revenue equals…

common fixed expense

are the fixed costs that are not traceable to the segments an…

Contributional Margin

Cost-Volume-Profit Relationship in Equ…

Contribution Margin Ratio

Change in Contribution Margin

is a product's price minus all associated variable costs, res…

Profit= (Sales-Variable Expenses) - Fixed Expenses... Broken Dow…

CM Ratio = Contribution Margin/Sales

Change in Contribution Margin = CM Ratio * Change in Sales

Contributional Margin

is a product's price minus all associated variable costs, res…

Cost-Volume-Profit Relationship in Equ…

Profit= (Sales-Variable Expenses) - Fixed Expenses... Broken Dow…

Contribution Margin

Contribution Margin Per Unit

Contribution Margin Ratio

Break even sales dollars

Sales less variable costs

Selling price less variable cost per unit

Contribution margin/sales

Fixed costs/contribution margin ratio

Contribution Margin

Sales less variable costs

Contribution Margin Per Unit

Selling price less variable cost per unit

Contribution margin less fixed costs y…

All else being equal, a company with a…

The contribution margin ratio explains…

LaComedia Dinner Theater sells tickets…

c) operating income

a) relatively high variable costs.

c) contributes towards fixed costs and generating a profit.

c) 35%

Contribution margin less fixed costs y…

c) operating income

All else being equal, a company with a…

a) relatively high variable costs.

Cost-Volume-Profit (CVP) Analysis

Assumptions Made Under CVP

Gross Profit

Contribution Margin Per Unit

A tool that focuses on the relationships among a company's pr…

1. Selling price is constant throughout the entire "relevant…

Sales - Cost of Goods Sold (COGS)

The sales price per unit of product, less all variable costs…

Cost-Volume-Profit (CVP) Analysis

A tool that focuses on the relationships among a company's pr…

Assumptions Made Under CVP

1. Selling price is constant throughout the entire "relevant…

activity index

break even point

contribution margin

contribution ratio

The activity that causes changes in the behavior of costs

the level of activity at which total revenue equals total costs

the amount of revenue remaining after deducting variable costs

the percentage of each dollar of sales that is available to a…

activity index

The activity that causes changes in the behavior of costs

break even point

the level of activity at which total revenue equals total costs

Breakeven Formula

Contribution Margin

Contribution margin per Unit

Breakeven Point in Units

Quantity = FC / (price per unit - VC per unit)

Sales Revenue - Variable Costs

Sales Price per Unit - Variable Cost per Unit

Fixed Costs / Contribution Margin per Unit

Breakeven Formula

Quantity = FC / (price per unit - VC per unit)

Contribution Margin

Sales Revenue - Variable Costs

Profit

Contribution Margin

Contribution Margin Ratio

Profit (No per unit data)

(Sales-Variable Expenses) - Fixed Expenses... (Unit CM * Quantit…

Sales Revenue - Variable Expenses

Contribution Margin/Sales

(CM Ratio * Sales) - Fixed Expenses

Profit

(Sales-Variable Expenses) - Fixed Expenses... (Unit CM * Quantit…

Contribution Margin

Sales Revenue - Variable Expenses

Contribution Margin

The break-even point is the level of s…

The CVP (cost-volume-profit) analysis…

The variable expense ration is the rat…

Price - Variable costs

0

- selling prices... - sales volume... -unit variable costs... -total f…

sales

Contribution Margin

Price - Variable costs

The break-even point is the level of s…

0

Cost-Volume-Profit analysis

CVP vital in decisions like...

Basic elements of CVP analysis

total contribution margin

one of the most powerful tools that managers have at their di…

1. deciding what products and services to offer... 2. determinin…

1. Break-even calculations ... 2. target profit analysis... 3. marg…

= Sales Revenue - Variable Costs

Cost-Volume-Profit analysis

one of the most powerful tools that managers have at their di…

CVP vital in decisions like...

1. deciding what products and services to offer... 2. determinin…

Contribution Margin Ratio

Contribution Margin

Unit Contribution Margin

Break-Even Sales (units)

Contribution Margin... ---------------------------------... Sales

Sales - Variable Costs

Sales price per unit - Variable Cost per unit

Fixed Costs... -----------------------------------... Unit Contribu…

Contribution Margin Ratio

Contribution Margin... ---------------------------------... Sales

Contribution Margin

Sales - Variable Costs

Absorption costing

Break-even point

Composite unit

Contribution margin per unit

Costing method that assigns both variable and fixed costs to…

The sales level at which a company neither earns an income no…

Generic unit consisting of a specific number of units of each…

The amount by which a product's unit selling price exceeds it…

Absorption costing

Costing method that assigns both variable and fixed costs to…

Break-even point

The sales level at which a company neither earns an income no…