ACC 220 Study Guide - Midterm Guide: Fixed Cost, Variable Cost, John Wiley & Sons
Document Summary
For cvp analysis, mixed costs must be classified into their fixed and variable components. One approach to the classification of mixed costs is the high-low method. By contrast, variable, or mixed costs change with relation to items such as sales or production volume. The cvp analyses are used to find the relationships with the complete volume of an independent variable, total costs, total revenues, and profits over time, i. e. a sales quarter or a sales year. Cvp analyses provide an easy to understand framework and structure to discuss planning issues and organizing data. Cost-volume-profit (cvp) analysis is defined as the study of the effects of changes in costs and volume on a company"s profits (wiley, j. , 2005). Accordingly i do not agree with the above statement because only two of the basic components of cost-volume-profit (cvp) analysis - unit selling prices and variable cost per unit relate to unit data.
