Business Administration 2257 Study Guide - Final Guide: Cash Flow, Fixed Asset, Cash Management

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Brian Langen

Document Summary

Fixed cost: does not vary with activity level: contribution analysis. Unit contribution = selling price variable cost. Pricing, sub-unit evaluation & sensitivity analysis: breakeven analysis. 1)*(expected % rev, product 1) + (cmr, product 2)*(expected % rev, Where weighted average price = (selling price, product 1) (expected % of units, product 1) + (selling price, product 2) (expected % of units, product 2) + (selling price, product 3) and weighted average variable. (expected % of units, product 1) + (variable cost, product 2) (expected % of units, product 2) + (variable cost, product 3) Measured as %age & compared to the hurdle rate specific to company. Measured as # of years needed for return to pay back the investment. Management wants to know how each segment is performing such that: managers can be evaluated, budgets can be set, business strategy can be formulated.