Managerial accounting Charles E. Davis Elizabeth Davis Cost Volume Profit Analysis and Pricing Decisions

Cost Volume Profit Analysis Multiproduct CVP Analysis Breakeven Analysis Cost Volume Profit Analysis Multiproduct CVP Analysis Pricing Decisions

Breakeven Analysis What does it mean to break even? If a product’s variable cost per unit increases while the selling price and fixed costs remain constant, what will happen to the breakeven point? How do you calculate the breakeven point in units? In dollars? What actions can a company take to reduce its breakeven point? What is the margin of safety? How is it calculated?

Cost Volume Profit Analysis How can managers use CVP analysis to determine the level of sales needed to attain a specific level of operating income? How can managers use CVP analysis to support their decision making? What assumptions are made in CVP analysis? Do those assumptions invalidate the predictions managers make using CVP analysis? Explain the concept of operating leverage.

Multiproduct CVP Analysis What is meant by the term sales mix? How do you calculate the sales required to break even or achieve a target operating income in a multiproduct setting? What assumption is required in multiproduct CVP analysis but is not necessary in single-product CVP analysis?

Pricing Decisions Define markup. How does a markup percentage differ from the gross margin percentage? Explain cost-plus pricing. What are some flaws of cost plus pricing? Explain how competitors influence the price under cost-plus pricing. Explain target costing. What alternatives does a company have if it cannot make a product at the target cost?