ACCT 2230 Chapter Notes - Chapter 7: Operating Leverage, Equals Sign, Contribution Margin
7 Mar 2016
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Document Summary
Cost volume profit (cvp) analysis helps managers understand relationships among cost, volume, and profit. Cvp focuses on how profits are affected by the following five elements: prices of products, volume or level of activity, per unit variable costs, total fixed costs, mix of products sold. Amount remaining from sales revenue after variable expenses have been deducted. If cm is not enough to cover fixed expenses, then a loss has occurred. Break-even point the level of sales at which profit is zero. The break-even point can also be defined as the point where total sales equals total expenses, or as the point where total contribution margin equals total fixed expenses: sales variable expenses fixed expenses = sh. Cost-volume-profit (cvp) graph the relationships among revenues, costs, and level of activity presented in graphic form. Unit volume is commonly represented on the horizontal x-axis, and dollars on the vertical y-axis.
