Textbook Notes (368,529)
Canada (161,958)
Management (865)
MGT223H5 (26)
Minlei Ye (13)
Chapter 07

MGT223 Chapter07:Cost-Volume-Profit Notes

3 Pages
Unlock Document

Minlei Ye

MGT223 Chapter07: Cost-Volume-Profit Analysis (CVP) Cost-Volume-Profit (CVP) Analysis: managers use to help them understand the interrelationship among cost, volume and profit by focusing on the following elements: 1. prices of products 2. volume or level of activity 3. per unit variable costs 4. total fixed costs 5. mix of products sold Total Contribution Margin = Sales – Variable Costs Contribution Margin per Unit = Price – Variable Cost per Unit Contribution margin Contribution margin per unit Contribution Margin Ratio = = Sales Price Break-Even-Point (BEP): when profit is zero (Sales – VC – FC = 0) Break-Even-Point in Units: number of units to sell to break even = X 1. equation method: X*Sales per unit – X*VC per unit – FC = 0 2. contribution margin method: Fixed expense BEP in Units = Contribution margin per unit Break-Even-Point in Dollars: amount of sales to break even = X 1. equation method: X – X*(1-CM ratio) – FC = 0 2. contribution margin method: Fixed expense BEP in Dollars = Contribution margin ratio * The relationship among revenue, cost, profit and volume can be expressed graphically by preparing a CVP Graph. - in a CVP graph, unit is on the horizontal axis and dollars on the vertical axis 450,000 400,000 Fixed Expenses 350,000 Total Expenses 300,000 Total Sales 250,000 200,000 Break-Even-Point 150,000 100,000 50,000 - - 100 200 300 400 500 600 700 800 Target Profit 1
More Less

Related notes for MGT223H5

Log In


Join OneClass

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

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.