1 / 4

Cost-Volume-Profit Analysis

Cost-Volume-Profit Analysis. Break Even Units Dollars of Sales Target Income Units Sales. Cost-Volume-Profit Analysis. Multiple Products Assume constant sales mix CMU for each product Then calculate break even based on sales mix Apples CMU $1; Oranges CMU $.50 Fixed costs: $100

ziarre
Download Presentation

Cost-Volume-Profit Analysis

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Cost-Volume-Profit Analysis • Break Even • Units • Dollars of Sales • Target Income • Units • Sales

  2. Cost-Volume-Profit Analysis • Multiple Products • Assume constant sales mix • CMU for each product • Then calculate break even based on sales mix • Apples CMU $1; Oranges CMU $.50 • Fixed costs: $100 • Sales mix: 40% apples, 60% oranges • Breakeven units?

  3. Cost-Volume-Profit Analysis • Evaluating alternatives • Increase in CM – Increase in Fixed Costs • Margin of safety • Sales – breakeven sales • Can be in units or dollars • Assume constant sales mix

  4. Cost-Volume-Profit Analysis • Operating leverage = CM/Operating Income • Cost structure: variable versus fixed costs • Higher fixed costs = more risk • Higher fixed costs better = lower variable costs • Higher fixed costs better = higher CMU • Higher CMU = greater increase in income for each increase in units sold

More Related