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Cost-Volume-Profit assumptions
The main assumptions required in C-V-P analysis are:
1) The relationship holds merely within the appropriate range. The relevant range is a band of activity in which a specified cost behavior is stated.2) The behavior of net cost and net revenue has consistently been determined and is lineal in the relevant range.3) All costs can be splitted into fixed and variable such that mixed costs are decomposed into their fixed and their variable components.4) Selling prices are constant hence we avoid quantity discounts.5) Efficiency and production stay similar therefore we ignore the learning curve effect.6) The prices of factors of production stay constant.7) There are no limiting factors
How to calculate straight line depreciation for a partial year i.e. Refurb. depreciation starts in may till end of 8 year lease. Therefore its 7.666 years
Non-zero lead time (determining reorder point) This basic EOQ model assumes that the suppliers lead time is zero (i.e. goods are delivered immediately on the day the order was
What are the limation of semi variable cost and how to overcome it?
A firm requires continuously monitoring and controlling its receivables to make sure that the dues are paid on the due date and no dues stay outstanding for a long period of time.
SK 2 Chapter 10: Master budgeting Objective How organisations strive to achieve their financial goals by preparing a number of budgets that together form an integrated business pla
500 000 debentures are in a company at a coupon value of R50 each in issue. During each financial year, interest on these debentures is paid in arrears and in equal quarterly inst
LIFE CYCLE COSTING Introduction Life cycle costing as its name implies costs the cost object i.e., product project etc. over its projected life. It is used to explain a s
Assumptions Underlying the CVP Analysis CVP analysis as discussed above is based on certain assumptions . if these assumptions are not recognized then serious error may result
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In this method, approximation of various assets here excluding cash and including liabilities are made getting into consideration the transactions in the ensuring period. Afterward
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