Cost-Volume-Profit (CVP) Analysis Shanica N. Todd-Higgins ACC/561 - ACCOUNTING Instructor: DAVID DUREN Schedule: 06/29/2015 - 08/03/2015 Campus: COLUMBIA SOUTH CAROLINA CAMPUS Group ID: SCMBA0914 CVP - What If Analysis Through research, according to Diane Wicks (2015), “Cost-volume-profit (CVP) analysis is used to assess the impact of potential changes in costs and volume on a company's operating profit and net profit. CVP analysis is also useful in making decisions regarding pricing of
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Economics, 9(3), 2009, 103-106 103 USING COST-VOLUME-PROFIT ANALYSIS IN DECISION MAKING GABRIELA BUŞAN, IONELA-CLAUDIA DINA * ABSTRACT: The cost-volume-profit study the manner how evolve the total revenues, the total costs and operating profit, as changes occur in volume production, sale price, the unit variable cost and / or fixed costs of a product. Managers use this analysis to answer different questions like: How will incomes and costs be affected if we still sell 1.000 units? But if
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DECEMBER 31, 2013 | | | | SALES | | $16,000,000 | MANUFACTURING COSTS: | | | VARIABLE | $7,200,000 | | FIXED | ------------------------------------------------- 2,340,000 | ------------------------------------------------- 9,540,000 | GROSS MARGIN | | 6,460,000 | SELLING & ADMIN COSTS: | | | COMMISSION TO AGENTS | 2,400,000 | | FIXED MARKETING COSTS | 120,000* | | FIXED ADMIN COSTS | ------------------------------------------------- 1,800,000 | -------------------------------------------------
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Cost-Volume Profit Analysis Cost-Volume-Profit (“CVP”) analysis is essential for any company to be able to determine break-even points, and determining short term decisions. Arguably, for small businesses, nothing could be more important, as CVP provides the minimum volume of a product needed to sell in order to experience neither a gain nor loss. For entrepreneurs it is important to be effective and efficient when utilizing CVP accounting processes. This provides the framework
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understanding the interdependency or relationship between cost, volume and profit in an organization mainly by focusing on interaction between elements such as a: Product Price b: Level or volume of activity c: Per unit variable cost d: Total fixed costs e: Mix of products sold. Assumptions: The cost volume profit analysis assumptions suggest that the selling price does not change and remains constant as the volume changes. As costs are liner as a result of which they can be accurately
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Rs. | 40,000 | 30,000 | | 30,000 | 20,000 | | 40,000 | 30,000 | 1. A Ltd. is manufacturing an identical product in two factories. The following are the details in respect of both factories : Selling price per unit Variable cost per unit Fixed cost Depreciation included in above Sales (Units) Capacity (Units) You are required to determine : * Output Break-even-points for each factory. * Capacity Break-even-point for each factory. * Cash Break-even-point for each factory
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TABLE OF CONTENT Executive summary……….………………………………………………………2 Background…………………………………………………………………3 Analysis of company situation………………………………………………....4-8 Analysis on market situation...............…………………………………….....9-12 Swot and competitor analysis ………………………………………………12-15 New product for McDonalds………………………………………………...15- 19 Future marketing strategy..........................................................
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activities • Decision making • Optimising the uses of resources Key Definitions a) Cost unit- the cost of an item a product or service. This could be a single item, a batch, a contract what ever is appropriate for the organisation. b) Cost classification - to group costs for analysis and control purposes c) Cost centre - a function or location for which costs are ascertained dividing into production (primary) and service (secondary) areas. 1. THE
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increasingly finding it was in a market which was becoming more competitive. As technologies age and patents expire new firms are taking market share away from the dominant firms. As the newer more competitive firms began to succeed, Oracle began to see profit margins decrease. Oracle was being forced into a corner with few choices for successful operations in the future. The maturing market which it found itself a part of was not going to bring it the same level of
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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
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