MGAB03H3 Lecture Notes - Lecture 2: Weighted Arithmetic Mean, W. M. Keck Observatory, Operating Leverage

• School: UTSC
• Department: Financial Accounting
• Course: MGAB03H3
• Professor: L I A N G C H E N

Document Summary

Cvp analyzes changes in profits in response to changes in sales cost, volumes, profits. Contribution margin = total revenue - total variable costs = s - v. Cm per unit = selling price p/unit - vc p/ unit. How much revenue from each unit sold can be applied to fc to cover them. Cmr - % which selling price (or revenue) p/ unit exceeds vc p/ unit. Sales quantity = (f + ebt) / cm = (f + ebt) / (s - v) Sales revenue = (f + ebt) / cmr = (f + ebt) / (s - v)/s. Quantity = (5,500,000 + 200,000) / (800 - 300) = 11,400 bikes. Revenue = (5,500,000 + 200,000) / (800 - 300)/800 = ,120,000. Breakeven point - when sales revenues covers all costs making 0 profit. Breakeven quantity = (5,500,000 + 0) / (800 - 300) = 11,000 bikes. Sales revenue = (5,500,000 + 0) / (800 - 300)/800 = ,800,000.