Chapter 12 Cost-Volume-Profit Analysis. Chapter 122 Chapter 12: Objectives Define break-even point (BEP) and cost-volume-profit (CVP) analysis and recognize.

Slides:



Advertisements
Similar presentations
Cost-Volume-Profit Analysis Managerial Accounting Prepared by Diane Tanner University of North Florida Chapter 7.
Advertisements

Cost-Volume-Profit Analysis and Planning
Cost-Volume-Profit Analysis (Contribution Margin) CURL SURFBOARDS
Kinney ● Raiborn Cost Accounting: Foundations and Evolutions, 8e © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated,
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 7 Cost-Volume- Profit Analysis.
CHAPTER 3 Cost-Volume-Profit (CVP) Analysis. 3-2 To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright © 2006 by Pearson Education. All.
Cost-Volume-Profit Relationships Chapter 6. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill The Basics of Cost-Volume-Profit (CVP) Analysis.
Cost Behavior and Cost-Volume-Profit Analysis
Cost-Volume-Profit Analysis Chapter 7. Cost Volume Profit Analysis n What Is the Break-Even Point? n What Is the Profit at Occupancy Percentages Above.
Analyzing Cost, Volume, and Pricing to Increase Profitability Chapter 3.
The Basics of Cost-Volume-Profit (CVP) Analysis Contribution margin (CM) is the difference between sales revenue and variable expenses. Next Page Click.
Chapter 9 Break-Even Point and Cost-Volume Profit Analysis Cost Accounting Foundations and Evolutions Kinney and Raiborn Seventh Edition COPYRIGHT © 2009.
Cost-Volume-Profit Relationships
Cost-Volume-Profit Relationships Chapter 6 © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill The Basics of Cost-Volume-Profit (CVP) Analysis.
Cost-Volume-Profit Analysis
16-1 Cost-Volume-Profit Analysis The Break Even Point and Target Profit in Units and Sales Revenue 1 Fundamental concept underlying CVP  All.
©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Kinney ● Raiborn Cost Accounting: Foundations and Evolutions, 9e © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated,
ACTG 3000 Managerial Accounting and Cost- Volume-Profit Analysis.
@ 2012, Cengage Learning Cost Behavior and Cost-Volume-Profit Analysis LO 4 – Using the Graphic Approach for CVP Analysis.
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 7 Cost-Volume- Profit Analysis.
Chapter 3 Cost/Volume/Profit Relationships
Fundamentals of Cost-Volume-Profit Analysis
Cost-Volume-Profit Analysis and Variable Costing
Cost Behavior Cost Volume Profit Analysis Chapter M3.
Chapter 5. Assumptions of CVP Analysis  Selling price is constant.  Costs are linear.  In multi-product companies, the sales mix is constant.  In.
Chapter 3 Cost/Volume/Profit Relationships Principles of Food, Beverage, and Labour Cost Controls, Canadian Edition.
Cost-Volume-Profit Relationships Chapter 6. © The McGraw-Hill Companies, Inc., 2002 Irwin/McGraw-Hill 2 The Basics of Cost-Volume-Profit (CVP) Analysis.
Cost-Volume-Profit Analysis: A Managerial Planning Tool
Chapter 7 Cost-Volume- Profit Analysis Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Chapter 3 Cost, Revenue, and Income Behavior
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 8 Cost-Volume- Profit Analysis.
Chapter 20 Cost-Volume-Profit Analysis
Cost-Volume-Profit Analysis: A Managerial Planning Tool
COST-VOLUME-PROFIT RELATIONSHIP
Module 7: Cost Behavior & Cost- Volume- Profit Analysis ACG 2071 Created by: M. Mari Fall
Cost-Volume-Profit Analysis: A Managerial Planning Tool Management Accounting: The Cornerstone for Business Decisions Copyright ©2006 by South-Western,
ACTG 3020 Chapter 6 - Cost-Volume-Profit Relationships.
Chapter Six Cost-Volume-Profit Relationships. CVP ANALYSIS Cost Volume Profit analysis is one of the most powerful tools that helps management to make.
Study Unit 8 CVP Analysis and Marginal Analsyis. SU- 8.1 – Cost-Volume-Profit (CVP) Analysis - Theory CVP = Break-even analysis Allows us to analyze the.
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license.
Cost-Volume-Profit Relationships Chapter 6 McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 18. Identify how changes in volume affect costs.
Cost-Volume-Profit Analysis. CVP Scenario Cost-volume-profit (CVP) analysis is the study of the effects of output volume on revenue (sales), expenses.
Cost-Volume-Profit Relationships Chapter 6. © The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin The Basics of Cost-Volume- Profit (CVP) Analysis.
Cost-Volume-Profit Relationships Chapter 6 McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin 8-1 Cost-Volume-Profit Analysis Cost-Volume-Profit Analysis 8 Chapter Eight.
Copyright © 2006, The McGraw-Hill Companies, Inc.McGraw-Hill/Irwin Cost-Volume-Profit Relationships.
Lecture 3 Cost-Volume-Profit Analysis. Contribution Margin The Basic Profit Equation Break-even Analysis Solving for targeted profits.
Chapter 6 Cost-Volume-Profit Analysis and Relevant Costing.
Cost Accounting Traditions and Innovations Barfield, Raiborn, Kinney Chapter 11 Absorption/Variable Costing and Cost-Volume-Profit Analysis.
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Multiple Product Cost-Volume-Profit Analysis
COST MANAGEMENT Accounting & Control Hansen▪Mowen▪Guan COPYRIGHT © 2009 South-Western Publishing, a division of Cengage Learning. Cengage Learning and.
CHAPTER 3 Cost-Volume-Profit (CVP) Analysis. Basic Assumptions Changes in production/sales volume are the sole cause for cost and revenue changes. Total.
Cost-Volume-Profit Analysis
Cost-Volume-Profit Analysis. THE BREAK-EVEN POINT(BEP) The break-even point is the point in the volume of activity where the organization’s revenues and.
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 7 Cost-Volume- Profit Analysis.
Analysis of Cost- Volume Pricing to increase profitability Chapter 3.
@ 2012, Cengage Learning Cost Behavior and Cost-Volume-Profit Analysis LO 3a – Understanding Break-Even.
CVP ANALYSIS. How will revenue and costs be affected If we sell 1,000 more units? If we sell 1,000 more units? If we raise or lower our selling prices.
Cost-Volume-Profit (CVP) Analysis. Profit planning is a function of : the selling price of a unit of product, the variable cost of making and selling.
Prepared by Diane Tanner University of North Florida ACG Basic Cost-Volume- Profit Analysis 4-2.
Managerial accounting
Cost-Volume-Profit Relationships
Cost-Volume-Profit Analysis: A Managerial Planning Tool
Cost-volume-profit analysis
Presentation transcript:

Chapter 12 Cost-Volume-Profit Analysis

Chapter 122 Chapter 12: Objectives Define break-even point (BEP) and cost-volume-profit (CVP) analysis and recognize their limiting underlying assumptions. Use CVP analysis in both single- and multi-product companies. Develop a break-even chart and profit-volume graph. Use the margin of safety and operating leverage concepts.

Chapter 123 CVP Assumptions Operating within Relevant Range All costs are Fixed or Variable All Revenue and Variable costs are constant per unit Constant contribution margin (Unit Sales price- Unit Variable cost) Total fixed cost is constant. Total Revenue Sales price * units = Fixed Cost + variable cost * units Total Cost Solving for “units”: Break even units = Fixed cost Sales – Variable cost/unit or

Chapter 124 Total Revenues - Total Costs = Profit R(X) - [VC(X) + FC] = P R(X) - VC(X) - FC = P where R = revenue (selling price) per unit $50 X = number of units sold (volume) R(X) = total revenues VC = variable cost per unit $15 VC(X) = total variable costs FC = total fixed costs$647,500 P = pre-tax profit $0 How many units do we need to sell to break even? Using CVP formula:18,500 units = $647,500/$35 or (1)$50X - ($9X + $6X) - $647,500=$0 (2)$50X - $15X - $647,500=$0 (3)$35X=$647,500 (4)X=$647,500÷$35 (5)X=18,500 units Setting profit equal to $0:

Chapter 125 Desired Profit To calculate sales necessary to earn a profit, treat the profit as an additional fixed cost. X units = $647,500 + $150,000 $35 X= 22,786 units

Chapter 126 After Tax Profit To calculate the pretax earnings necessary to generate after tax earnings: Pre tax earnings =After tax earnings 1 – Tax rate $250,000=$150,

Chapter 127 Multi Product Analysis Assume constant product mix Calculate contribution margin per basket Calculate break-even baskets Determine total units per product

Chapter 128 Additional Concepts Margin of Safety Operating Leverage

Chapter 129 Conclusions At break even, total cost = total revenue There are strict assumptions in CVP analysis CM ratio is CM per unit/SP per unit. Desired profit must be adjusted for taxes. Multi-product CVP analysis can be accomplished. Operating leverage can be used in sensitivity analysis

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2024 SlidePlayer.com. Inc. All rights reserved.