Đang chuẩn bị nút TẢI XUỐNG, xin hãy chờ
Tải xuống
Chapter 5 - Cost-volume-profit relationships. After studying chapter 5, you should be able to: Explain how changes in activity affect contribution margin and net operating income, prepare and interpret a cost volume-profit (CVP) graph and a profit graph, use the contribution margin ratio (CM ratio) to compute changes in contribution margin and net operating income resulting from changes in sales volume,. | Cost-Volume-Profit Relationships Chapter 5 Key Assumptions of CVP Analysis Selling price is constant. Costs are linear and can be accurately divided into variable (constant per unit) and fixed (constant in total) elements. In multiproduct companies, the sales mix is constant. In manufacturing companies, inventories do not change (units produced = units sold). Basics of Cost-Volume-Profit Analysis Contribution Margin (CM) is the amount remaining from sales revenue after variable expenses have been deducted. The contribution income statement is helpful to managers in judging the impact on profits of changes in selling price, cost, or volume. The emphasis is on cost behavior. The Contribution Approach Sales, variable expenses, and contribution margin can also be expressed on a per unit basis. If Racing sells an additional bicycle, $200 additional CM will be generated to cover fixed expenses and profit. The Contribution Approach Each month, RBC must generate at least $80,000 in total . | Cost-Volume-Profit Relationships Chapter 5 Key Assumptions of CVP Analysis Selling price is constant. Costs are linear and can be accurately divided into variable (constant per unit) and fixed (constant in total) elements. In multiproduct companies, the sales mix is constant. In manufacturing companies, inventories do not change (units produced = units sold). Basics of Cost-Volume-Profit Analysis Contribution Margin (CM) is the amount remaining from sales revenue after variable expenses have been deducted. The contribution income statement is helpful to managers in judging the impact on profits of changes in selling price, cost, or volume. The emphasis is on cost behavior. The Contribution Approach Sales, variable expenses, and contribution margin can also be expressed on a per unit basis. If Racing sells an additional bicycle, $200 additional CM will be generated to cover fixed expenses and profit. The Contribution Approach Each month, RBC must generate at least $80,000 in total contribution margin to break-even (which is the level of sales at which profit is zero). The Contribution Approach If RBC sells 400 units in a month, it will be operating at the break-even point. CVP Relationships in Equation Form Unit CM = Selling price per unit – Variable expenses per unit It is often useful to express the simple profit equation in terms of the unit contribution margin (Unit CM) as follows: Profit = (P × Q – V × Q) – Fixed expenses Profit = (P – V) × Q – Fixed expenses Profit = Unit CM × Q – Fixed expenses Unit CM = P – V CVP Relationships in Graphic Form The relationships among revenue, cost, profit, and volume can be expressed graphically by preparing a CVP graph. Racing Bicycle developed contribution margin income statements at 0, 200, 400, and 600 units sold. We will use this information to prepare the CVP graph. Preparing the CVP Graph Break-even point (400 units or $200,000 in sales) Units Dollars Loss Area Profit Area Contribution Margin Ratio (CM Ratio) $100,000
