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Study Unit 8. CVP Analysis and Marginal Analsyis. SU- 8.1 – Cost-Volume-Profit (CVP) Analysis - Theory. CVP = Break-even analysis Allows us to analyze the relationship between revenue and fixed and variable expenses It allows us to study the effects of changes in Sales volume Sales price

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study unit 8

Study Unit 8

CVP Analysis and Marginal Analsyis

su 8 1 cost volume profit cvp analysis theory
SU- 8.1 – Cost-Volume-Profit (CVP) Analysis - Theory
  • CVP = Break-even analysis
    • Allows us to analyze the relationship between revenue and fixed and variable expenses
    • It allows us to study the effects of changes in
      • Sales volume
      • Sales price
      • Product mixes
      • What else……?
  • CVP analysis is done with what assumptions?
  • What is the break-even point and where is it on a graph?

Continue

su 8 1 cost volume profit cvp analysis theory1
SU- 8.1 – Cost-Volume-Profit (CVP) Analysis - Theory
  • Other terms and def.
    • Margin of safety
    • Mixed costs
    • Revenue or sales mix
    • Sensitivity analysis
    • Unit Contribution Margin (UCM)

Continued

su 8 1 cost volume profit cvp analysis theory2
SU- 8.1 – Cost-Volume-Profit (CVP) Analysis - Theory
  • Break-even point in units

Fixed costs

UCM

  • Break-even point in dollars

Fixed costs

CMR

su 8 1 cost volume profit cvp analysis theory3
SU- 8.1 – Cost-Volume-Profit (CVP) Analysis - Theory
  • Review of questions:
    • 1 – Diff. gross margin and contribution margin
    • 5 – Effect of an increase in CM
    • 6 – Effects on BEP by changes in CM
su 8 2 cvp analysis basic calculations
SU – 8.2 CVP Analysis – Basic Calculations
  • Problems
    • 8, 9, 12 & 13 on page 330
su 8 3 cvp analysis target income calculations
SU – 8.3 CVP Analysis – Target Income Calculations
  • Target Operating Income

Fixed costs + Target operating income

UCM

  • Target Net Income

Fixed costs + Target net income / (1.0 – tax rate)

UCM

  • Problem 15, 16 and 18 on page 333
su 8 4 cvp analysis multiproduct calculations
SU – 8.4 CVP Analysis – Multiproduct Calculations
  • Multiple Products (or Services)

S = FC + VC

  • Choice of Product decisions
  • Special Orders
su 8 5 marginal analysis
SU 8.5 – Marginal Analysis
  • Accounting Costs vs. Economic Costs
  • Explicit vs. Implicit Costs
  • Accounting vs. Economic Profit
  • Marginal Revenue and Marginal Cost
  • Profit Maximization
  • Short-Run Cost Relationship
su 8 6 short run p rofit m aximization
SU 8.6 Short-run Profit Maximization
  • Pure Competition
  • Monopoly
  • Monopolistic Competition
  • Oligopoly

Quiz questions

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