BUSI 601 Chapter Notes - Chapter 9: Contribution Margin, Variable Cost, Income Statement

• School: Liberty University
• Department: Business
• Course: BUSI 601
• Professor: Hinton

Document Summary

Chapter 9: short term profit planning cost volume profit (cvp) analysis. Sales variable costs fixed costs (units sold x selling price per unit) (units sold x variable cost per unit) fixed costs. Contribution margin per unit: the difference between the selling price per unit and the variable cost per unit; it is a measure of the change in operating profit for each unit change in sales. Total contribution margin: the contribution margin per unit multiplied by the number of units sold. Contribution margin ratio: the ratio of the contribution margin per unit to the selling price per unit. In a contribution income statement variable costs are subtracted from sales to get total contribution margin, from which fixed costs are subtracted, to yield the amount of operating profit for the period. Breakeven point: the point at which total revenues equal total costs, so that operating profit is zero.