COMM 305 Study Guide - Rela, Siemens S200, Volatility Risk
Document Summary
Cost-volume-profit (cvp) analysis is the study of the effects that changes in costs and volume have on a company"s profits. The behaviour of both costs and revenues is linear throughout the relevant range of the activity index. All costs can be classified with reasonable accuracy as either variable or fixed. Changes in activity are the only factors that affect costs. Inventory levels remain constant all units that are produced are sold. When more than one type of product is sold, the sales mix will remain constant. That is, the percentage of total sales that each product represents will stay the same. Cvp analysis because different products will have different cost relationships. In this chapter, we assume first a single product is being sold. The cost-volume-proflt (cvp) income statement classifies costs as variable or fixed and calculates a contribution margin. Contribution margin (cm) is the amount of revenue that remains after variable costs have been deducted.
