MGA 202 Chapter 5: Chapter 5.docx
10 Dec 2014
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Document Summary
Chapter 5: cost volume profit, helps managers understand the relationship among cost, volume, and profit, focus attention on, selling price of product, sales of volume, unit variable cost, total fixed cost, business decisions. What type of productive facilities to acquire: contribution income statement, emphasizes behavior of costs, helps managers judge the impact on profits of changes in the selling price, cost or volume, sales, variable expenses and contribution margin are expressed on a per unit basis as well as in total, total sales and total variable expenses can each be divided by quantity of units sold to get sales price per unit and variable expense per unit, contributed margin, amount remaining from sales revenue after variable expenses have been deducted, amount available to cover fixed expenses and then to provide profits for the periods net operating expense, if contributed margin is to small to cover fixed expense, then a loss occurs, contributed margin ratio.
