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Klear's Camera

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Submitted By gingeressence
Words 1639
Pages 7
Abstract
The Klear Camera Company is creating a manufacturing plan that will provide the company with the ability to manufacture and sell a newly designed video camera for an estimated selling price of $1,000. However, developers of this plan must first conduct a cost volume profit analysis (CVPA) in order to gather pertinent information that will allow the development team to establish goals and objectives to guide the team towards desired results. Calculating the contribution margin (CM), the contribution margin per unit (CMU), the contribution margin ratio (GMR), a required number of sales, and a targeted profit, will provide managers with the information necessary to create, revise, and implement a plan that is geared to generating expected results for the plan in question. “The objective (of any development management team) is to determine (the) number of products that must be sold at a given price to cover the costs, or (in project financing) number of months or years required by the forecasted total net cash flow to equal estimated total project costs.” (Cost Volume Profit Analysis).

Introduction
The Klear Camera Company manufactures video cameras and has plans to develop and manufacture an item that is new to the market. This newly designed video camera by Klear is expected to have an anticipated selling price of $1,000 per camera. With these production goals in mind, the managerial accounting staff must take into account a few factors that will affect the company’s goal to generate a profit; the product’s contribution margin, contribution margin per unit, and its contribution margin ration. Without incorporating the affect of these factors within the design of the production plan, Klear Camera leaves itself vulnerable to profit losses. As a result, any effective managerial accounting team would execute an accurate cost volume

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