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Cost Analysis 1

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Submitted By 4mybaba1
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Pages 37
Chapter 9

Profit Planning: Cost-Volume-Profit Analysis

Cases

|9-1 |Cost-Volume-Profit Analysis and Strategy |
|9-2 |Cost-Volume-Profit Analysis and Cost Estimation |
|9-3 |Cost-Volume-Profit Analysis and Strategy |
|9-4 |Cost-Volume-Profit Analysis and Strategy: The ALLTEL Pavilion |
|9-5 |Sensitivity Analysis; Regression Analysis |
|9-6 |Profit Planning: Choice of Cost Structure |
|9-7 |Pancake World |

Readings

9-1: “Tools for Dealing with Uncertainty” by David R. Fordham, CMA, CPA, Ph.D and S. Brooks Marshall, CFA. DBA

This article explains how to use simulation methods within a spreadsheet program such as Excel to perform sensitivity analysis for a given decision context. The available spreadsheet simulation software systems include the programs Crystal Ball and @Risk, among others. These software systems allow the user to analyze the effect of uncertainty on the potential outcomes of a decision. These tools can be applied directly to CVP analysis. The tools allow the user to see the potential effect on the breakeven level or total profit of potential variations in the key uncertain factors in the analysis. The uncertain factors affecting breakeven might be the unknown level of unit variable cost, price or fixed cost. Also, in determining total profit, the unknown level of demand might be a key uncertain factor.

Exercise: Use a

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