ACC 406 Chapter 4: Chapter 4 - Cost Volume Profit Analysis - A Managerial Planning Tool

50 views2 pages

Document Summary

Break even point in units and in sales dollars. Cost volume profit (cvp) analysis estimates how changes in cost (both variable and fixed), sales volume and price affect a company"s profit. It is a powerful tool for planning and decision making. One of the most versatile and widely applicable tools used by managerial accountants to help managers make better decision. Break-even point is the point where total revenue = total costs (ex. the point of zero profit) Much more useful to organize costs into fixed and variable components. Costs refer to all costs of the company; production, selling and administration. Variable costs are all costs that increase as more units are sold, including direct materials, direct labour, variable overhead and variable selling and administration costs. Fixed costs include overhead and fixed selling and administrative expenses. Income statement format that is based on the separation of costs into fixed and variable components is called contribution margin income statement .

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

Related Questions