BUS 254 Chapter Notes - Chapter 7: Contribution Margin, Earnings Before Interest And Taxes, Operating Leverage

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Arsineh Garabedian

Document Summary

Examines interrelationships of sales activity, prices, costs, and profits in planning and decision-making situations. An organization"s costs are categorized into variable and fixed components before beginning the analysis. The point in the volume of activity where the organization"s revenues and expenses are equal, or when profit equals to zero: computed by two approaches. Unit variable expense sales volume units o o (x ) ( x ) ,000=sh (breakeven point) x=400 surf boards. Consider the following information developed by the accountant at curl. For each additional surf board sold, curl generates in contribution margin. Calculate the breakeven point in sales dollars rather than units. Viewing cvp relationships in a graph gives managers a perspective that can be obtained in no other way. Capture the relationship between the profit and volume of an activity: consider the following information for curl inc. Breakeven point the intersection of the total revenue line and total expense line.