COMMERCE 2AB3 Study Guide - Final Guide: Profit Maximization, Maximum Capacity, Opportunity Cost
26 Apr 2015
School
Department
Course
Professor
Document Summary
Cost-volume-profit: examines the relationship between the firm cost structure (fc vs vc) and sales volume and the effects of this relationship on the profitability of the firm used for planning and decision making. Revenue function and cost function are linear. Sp, tfc, vc/unit are known with certainty and will remain constant during the period. Multi-product the sales mix is assumed to be known and remains constant during the. # units produced = # units sold (no changes in level of inventory) period. X(units) = [tfc + ni(before tax)] / [ucm] X ($) = [tfc + ni(before tax)] / [ucm/usp] important for services. Sensitivity analysis: what if technique used to examine how a result will change if assumptions change. Uncertainty: possibility actual amount does not equal expected amount. Income tax (note bep is unaffected by tax) Ni (before tax) = ni (after tax) / (1-t)
