ACC 406 : chap 3

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cerisewater-buffalo256

16 Apr 2011

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These notes are posted on blackboard to high light and complement certain aspects of the topic, facilitate those students who may have missed my lecture, balance traditional with internet based learning and overall enhance students learning. The notes are not meant to suggest what may be in the exams, replace coming to class, textbook studying and/or problem solving. This chapter examines cost volume profit relationships or the cost behaviour impact on company profitability. Cost behaviour how an organization"s activities affect its costs. Cost drivers - output measures of resources and activities. In this chapter, volume-based cost drivers are used in order to examine cost behaviour. Variable and fixed costs refer to how cost behaves with respect to changes in a particular cost driver. Variable cost - a cost that changes in direct proportion to changes in the cost driver (i. e. , costs per unit do not change, total costs do change).

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Cost-volume-profit (CVP)

posted Nov 28, 2016, 4:07 AM

Cost-volume-profit (CVP) analysis is a key step in manydecisions. CVP analysis involves specifying a model of therelations among the prices of products, the volume or level ofactivity, unit variable costs, total fixed costs, and the salesmix. This model is used to predict the impact on profits of changesin those parameters. Explain how changes in activity affectcontribution margin and net operating income.

sapphireprairie-dog466

Name the definitions given below:

______________	1.	Technique that examines changes inprofits in response to changes in sales volumes, costs, andprices.
______________	2.	Percent by which the selling price (orrevenue) per unit exceeds the variable cost per unit, orcontribution margin as a percent of revenue.
______________	3.	Diagram of the relationship betweentotal revenues and total costs; illustrates how an organizationâsprofits are expected to change under different volumes ofactivity.
______________	4.	Index of the extent to which the costfunction is made up of fixed costs.
______________	5.	Total revenue minus total variable costs.
______________	6.	Proportion of different products or services that anorganization sells.
______________	7.	Excess of an organizationâs expectedfuture sales (in either revenue or units) above the breakevenpoint.
______________	8.	The level of activity where equal costor profit occurs across multiple alternatives.
______________	9.	Selling price per unit minus variablecost per unit.
______________ 10.		Level of operating activity at whichrevenues cover all fixed and variable costs and there is noprofit.
______________ 11.		Margin of safety as a percentage ofactual or estimated sales (units or revenues).
______________ 12.		A systematic tendency for people to beoverly optimistic about the outcomes of their plans andprojects.

Name the definitions given below:

______________	1.	Technique that examines changes inprofits in response to changes in sales volumes, costs, andprices.
______________	2.	Percent by which the selling price (orrevenue) per unit exceeds the variable cost per unit, orcontribution margin as a percent of revenue.
______________	3.	Diagram of the relationship betweentotal revenues and total costs; illustrates how an organizationâsprofits are expected to change under different volumes ofactivity.
______________	4.	Index of the extent to which the costfunction is made up of fixed costs.
______________	5.	Total revenue minus total variable costs.
______________	6.	Proportion of different products or services that anorganization sells.
______________	7.	Excess of an organizationâs expectedfuture sales (in either revenue or units) above the breakevenpoint.
______________	8.	The level of activity where equal costor profit occurs across multiple alternatives.
______________	9.	Selling price per unit minus variablecost per unit.
______________ 10.		Level of operating activity at whichrevenues cover all fixed and variable costs and there is noprofit.
______________ 11.		Margin of safety as a percentage ofactual or estimated sales (units or revenues).
______________ 12.		A systematic tendency for people to beoverly optimistic about the outcomes of their plans andprojects.

lavendermanatee604

ACC 406 : chap 3

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