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 relationship between revenue and fixed and variable expenses It allows us to study the effects of changes in Sales volume Sales price Product mixes What else……? CVP analysis is done with what assumptions? What is the break-even point and where is it on a graph? Continue

SU- 8.1 – Cost-Volume-Profit (CVP) Analysis - Theory Other terms and def. Margin of safety Mixed costs Revenue or sales mix Sensitivity analysis Unit Contribution Margin (UCM) Continued

SU- 8.1 – Cost-Volume-Profit (CVP) Analysis - Theory Break-even point in units Fixed costs UCM Break-even point in dollars Fixed costs CMR

SU- 8.1 – Cost-Volume-Profit (CVP) Analysis - Theory Review of questions: 1 – Diff. gross margin and contribution margin 5 – Effect of an increase in CM 6 – Effects on BEP by changes in CM

SU – 8.2 CVP Analysis – Basic Calculations Problems 8, 9, 12 & 13 on page 330

SU – 8.3 CVP Analysis – Target Income Calculations Target Operating Income Fixed costs + Target operating income UCM Target Net Income Fixed costs + Target net income / (1.0 – tax rate) UCM Problem 15, 16 and 18 on page 333

SU – 8.4 CVP Analysis – Multiproduct Calculations Multiple Products (or Services) S = FC + VC Choice of Product decisions Special Orders

SU 8.5 – Marginal Analysis Accounting Costs vs. Economic Costs Explicit vs. Implicit Costs Accounting vs. Economic Profit Marginal Revenue and Marginal Cost Profit Maximization Short-Run Cost Relationship

SU 8.6 Short-run Profit Maximization Pure Competition Monopoly Monopolistic Competition Oligopoly Quiz questions