BU467 Chapter Notes - Chapter 3: Spreadsheet
Document Summary
Cost-volume-profit (cvp) analysis: a technique that examines changes in profits in response to changes in sales volumes, costs, and prices. Used to plan future levels of operating activity. What products to emphasize, volume of sales needed to reach profit levels, amount of revenue needed to avoid losses, whether to increase. Profit = total reveneue total vc total fc. Contribution margin = total revenue total vc. Cm/unit = selling price per unit vc per unit: shows us how much revenue from each unit sold can be put towards fc. Ebt = (s*q)-(vc*q)-fc = (cm/unit*q) fc. Cvp analysis in units: quantity of units needed to obtain target profit (q) Cvp analysis in revenues: contribution margin ratio (cmr): the percentage by which the selling price per unit exceeds the vc per unit. Cmr = (s vc) / s: sr = sales revenue needed to cover fc.
