ACC 406 Chapter 4: Chapter 4

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rosedeer364

7 Feb 2012

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Chapter 4 cost-volume-profit analysis: a managerial planning tool. ex. on pg 125: change in income from operations = change in sales dollars x cm ratio. ex. on pg 125: variable costs as a % of sales r equal to 100% - the cm ratio (ex. on pg 125, cm ratio is useful in developing business strategies (ex. on pg 126) Unit contribution margin y unit contribution margin is useful for analyzing the profit potential of proposed decisions: unit cm = sales price per unit variable cost per unit. ex. on pg 126: change in income from operations = change in sales units x unit cm. ex. on pg 126 y ex. on bottom & cornerstone 4-1 on pg 126-127. If variable cost ratio is shown, it can be subtracted from 1 to calculate the cm ratio (1-

Related Questions

Discuss sensitivity analysis and how changes in selling price,variable costs, and fixed costs affect the contribution margin perunit and breakeven point. Discuss ways managers use informationtechnology to perform sensitivity analysis.

If you no longer held the belief that the negative managerialscenarial theory was an accurate reflection of reality, what otherbeliefs would you need to change as a consequence?
The breakeven point is the point when the profit of the company isequal to $0. It is the point when sales equals fixed costs andvariable costs. There are two different methods that can be used tocalculate the breakeven point, the equation method and thecontribution margin method.

The equation method formula is as follows:
Sales = Variable Costs + Fixed Costs + $0

bluetoad294

using sensitivity analysis

dependable drivers driving school charges $250 per student toprepare and administer written driving tests. variable costs of$100 per student include trainers' wages, study materials, andgasoline. annual fixed costs of $75,000 include the trainingfacility and fleet of cars.

Requirements

1. For each of the following independent situations, calculatethe contribution margin per unit and the breakeven point in unitsby first referring to the original data provided:

a. Breakeven point with no change in information.

b. decrease sales price to $220 per student

c. decrease variable costs to $50 per student

d. decrease fixed costs to $60,000.

2. compare the impact of changes in the sales price, variablecosts, and fixed costs on the contribution margin per unit and thebreakeven point in units.

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ACC 406 Chapter 4: Chapter 4

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