100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Cost-Volume-Profit Summary $4.74   Add to cart
Quickly navigate to
Preview
  2.  
  3. University Of Cape Town (UCT)
  4.  
  5. Management Accounting (ACC2022H)

Summary

Cost-Volume-Profit Summary
 5 views  0 purchase
  • Course
  • Management Accounting (ACC2022H)
  • Institution
  • University Of Cape Town (UCT)

Fixed and variable costs: Definitions and examples. Contribution margin: Calculating and interpreting the contribution margin per unit and ratio. Break-even analysis: Finding the break-even point in units and dollars. Target profit analysis: How to calculate the required sales volume to meet a p...

[Show more]

Preview 2 out of 9  pages

Document information

  • September 15, 2024
  • 9
  • 2024/2025
  • Summary

Subjects

  • cost volume profit

Written for

  • University of Cape Town (UCT)
  • Management Accounting (ACC2022H)
All documents for this subject (3)

Seller

avatar-seller
kevinlondeka

Content preview

Cost Volume Profit

CVP used to determine how
analysis is
changes in
prices costs
·
,



and volume affert
company's operating income.
a




Break-even
·
point

TotalCosts = Total Revenue
Contribution towards
covering fixed costs
margin

Fixed Costs

Contribution
Margin per unit




=
Break-even units
-~>
Selling
Definition
unit-variable cost
price per per
.
unit
.




The formula can be
manipulated to calculate other numbers or factors .




At Break-even ,
total fixed costs
= Contribution
Margin

Importance
-



of break-even
point
Detection of loss
Risk of business operations .




Closer are to the BE the riskier the business
you , .




CVP
analysis assumptions
·




① All variables remain constant

②A single product
I
or constant sales mix

③ Total sales and Revenue are linear functions
① Profit is
↓ calculated using the variable

cost driver
costing system
Sales Volume is the only .

, ⑤ Costs can be
accurately divided into their fixed and variable
elements.
⑥ The
⑦
analysis only applies to relevant range a

It
only applies to the short-term .




⑤ All inventories
produced during the period sold within are that
period.

Contribution Margin Ratio


Total contribution fixed
margin-What
·
is available to .
pay
costs




Contribution margin
Revenue/Sales

Shows of rand of sales that is available
the
percentage
each


fixed
to costs and then make
profit
cover a .




e .




.
g
Milkshake business (Covered in Lecture)

CMR =
RIO
R15

= %
6667

>
-
This ratio is constant




Break-even Sales Not Units



· We want to know the sales amount needed to break-even



Fixed Costs Selling Price
simply
BEX
or
,
CM Ratio
↳ Used if
selling price isn't
given Units

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller kevinlondeka. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $4.74. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

79223 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$4.74
  • (0)
  Add to cart