COMM 305 Lecture Notes - Lecture 1: Earnings Before Interest And Taxes, Fixed Cost, Variable Cost
26 Mar 2019
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Chapter 6: cvp x (x) x (x) x (x) x. *tip: whenever you see the word ratio, take the name of the ratio and divide it by sales. i. e. cm ratio = cm/sales. In units = (fc + toi)/ cm per unit. In sales $ = (fc + toi)/ cm ratio. In units = (fc + toi before tax)/ cm per unit. In sales $= (fc + toi before tax/ cm ratio. *tip: just know the toi with tax implication formulas as it applied for all situations. Mos in units = actual units sold b/e units. Mos in sales $ = actual sales $ - b/e sales $ Measures the sensitivity of net income in relation to a change in sales volume. Relevant/ differential cost future costs and revenues that will be changed by a decision. Opportunity cost in choosing to take one action, the company may have to give up the opportunity to benefit from some other action.
