Cost-volume profit analysis , Managerial Accounting

COST-VOLUME PROFIT (C-V-P) ANALYSIS INTRODUCTION

You can employ cost-volume-profit analysis to examine the natural relationship among cost, volume, and profit in pricing decisions. In cost-volume-profit study, you:

• Must consider only short-term operations. The short term might be stated as a period too short to allow facilities expansion or contraction or other changes which might affect total pricing relationships.

• Suppose that a straight line can reasonably be employed in analysis. Whereas actual price behavior might not obey a straight line, its use can closely estimate actual cost behavior in the short run.

• When purchase volume moves exterior the relevant range of the accessible data, the straight-line supposition and the accurateness of estimates become questionable.

• When you know which product variable costs per unit are reducing as quantity rises, consider employing the log-linear improvement curve concept. Improvement curves are specifically helpful in limited production circumstances where you can acquire cost or price information for all units sold.

Posted Date: 12/5/2012 6:45:12 AM | Location : United States







Related Discussions:- Cost-volume profit analysis , Assignment Help, Ask Question on Cost-volume profit analysis , Get Answer, Expert's Help, Cost-volume profit analysis Discussions

Write discussion on Cost-volume profit analysis
Your posts are moderated
Related Questions
According to the Philadelphia Inquirer, in 2004 the city of Philadelphia planned to spend $14 million to convert the Convention Center into an appropriate venue for the Republican

Activity Based Management (ABM) Also referred to as activity based cost management (ABCM). This is used to describe the cost management application of ABC. To implement A

Cash to debt service ratio  Cash to debt service ratio also known as debt cash flow coverage ratio is an improvement over the interest coverage ratio and is calculated. The

opening stock 19000 closing stock 21000 sales 200000 gross profit 25% on sales calculate stock turnover ratio

Archie Ltd manufactures a product called Gizmo. It uses the following direct inputs: Price Quantity Cost per unit of output Direct materials $4 per gram 10 grams per unit $40 per

Extensions to Linear Programming In many real situations the solutions to linear programming models make sense only if they have integer values. Rounding off the linear programmi

Logan Products computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it estimated that 39,000 direct labor-hours would

Transition probabilities These are the probabilities of moving from one state to another in the next time period. Usually they are written in the form of a probability matrix.

What are the factors which led to the development of ABC: 1) Traditional costing fails to capture cause and effect relationship 2) Traditional costing often fails to highlig

Engineering method These methods are based on the use of engineering analysis of technological relationship between inputs and outputs e.g. method studies and time and motion s