BA 3340 Lecture 28: 2018 summer semester lecture149
Document Summary
In a multiple-product environment, the formula is modified: Uts 2014 accounting for business decisions a (cid:131) the impact of taxes we need to consider the following formula: (cid:131) [lecture objective] use cvp analysis for profit planning and graph the cvp relations. A company with high fixed costs in relation to variable costs will have a high level of operating leverage in this case, net profit = very sensitive to changes in sales volume. A company with high variable costs in relation to fixed costs will have a low level of operating leverage and profit will not be as sensitive to changes in sales volume. E. g. when sales increase by 10%, the p(cid:396)ofit of (cid:272)o(cid:373)pa(cid:374)(cid:455) (cid:858)a(cid:859) (cid:894)ope(cid:396)ati(cid:374)g leverage of 2) will increase by 20%. Meanwhile, the profit of company (cid:858)b(cid:859) (cid:894)ope(cid:396)ati(cid:374)g le(cid:448)e(cid:396)age of (cid:1005). (cid:1009)(cid:895) (cid:449)ill increase by 15%. Describe the budget development process, behavioural implications of budgeting, advantages of budgeting and the master budget.
