Textbook Notes (369,205)
Accounting (533)
ACC 406 (130)
Chapter 4

# ACC 406 chapter 4

1 Page
115 Views

Department
Accounting
Course Code
ACC 406
Professor
Anthony Chan

This preview shows half of the first page. Sign up to view the full page of the document.
Description
CHAPTER 4 – COST-VOLUME-PROFIT ANALYSIS: A MANAGERIAL PLANNING TOOL 1. Determine the breakeven point in number of units and in total sales dollars  At breakeven, total costs (variable and fixed) equal total sales revenue  Breakeven units equal total fixed costs divided by the contribution margin (price – variable cost per unit)  Breakeven revenue equals total fixed costs divided by the contribution margin ratio 2. Determine the number of units that must be sold, and the amount of revenue required, to earn a target profit  To earn a target profit, total cost + the amount of target profit must = total sales revenue  Units to earn target profit = total fixed costs + target profit / by the contribution margin  Sales revenue to earn target profit = total fixed costs + target profit / by the contribution margin ratio 3. Prepare a profit volume graph and a cost-volume-profit graph, and explain the meaning of each  CVP assumes linear revenue and cost functions, no finished goods ending inventories, constant sales mix, and that selling price and fixed and variable costs are known with certainty  Profit volume graphs plot the relationship betw
More Less

Only half of the first page are available for preview. Some parts have been intentionally blurred.

Unlock Document

Unlock to view full version

Unlock Document
Me

OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Join to view

OR

By registering, I agree to the Terms and Privacy Policies
Just a few more details

So we can recommend you notes for your school.