COMM 294 Chapter Notes - Chapter 7: Contribution Margin, Earnings Before Interest And Taxes, Income Statement
Document Summary
This needs certain data that is consistent with the assumptions underlying cvp analysis. Mangers need a solid understanding of the contribution margin concepts. Components of cvp are: (need 4 of 5 to estimate) Pro t or loss (operating income provided by business) A change in volume is the only factor that affects costs. Managers can classify each cost (or components of mixed costs) as either variable or xed. These costs are linear throughout the relevant range of volume. Revenues are linear throughout the relevant range of volume. The sales mix of products will not change. Sales mix is the combo of products that make up total sales. If contribution margin differs across products, changes in sales mix will affect cvp. Many managers prefer the contribution margin income statement because it gives info for. Stated as a total amount on the contribution margin income statement. Can offer on per unit basis or percentage/ratio.
