ACCG200 Lecture Notes - Lecture 7: Variable Cost, Contribution Margin, Net Profit
19 Jun 2018
School
Department
Course
Professor
1
Cost Volume Profit Analysis
Welcome to ACCG200
Week 7
find more resources at oneclass.com
find more resources at oneclass.com
2
Cost volume profit (CVP) analysis
It is a technique used to determine the effects of
changes in an organisation’s sales volume on:
–Costs
–Revenue
–Profit (Revenue – Costs)
Aim: To assist managers in making decisions to
improve PROFITABILITY and increase
shareholder value
find more resources at oneclass.com
find more resources at oneclass.com
3
Key terms
•Contribution margin variables
•Breakeven Point (in sales units)
•Breakeven Point (in dollars)
•Safety margin
•Weighted average contribution margin (WACM)
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
It is a technique used to determine the effects of changes in an organisation"s sales volume on: Aim: to assist managers in making decisions to improve profitability and increase shareholder value. Key terms: contribution margin variables, breakeven point (in sales units, breakeven point (in dollars, safety margin, weighted average contribution margin (wacm) = total sales revenues total variable costs. = unit contribution margin / unit sales price. Abc ltd sold 6000 handbags at the price of . Direct labour of 1. 5 hours @ per hour. Lecture example 1 solutions: the contribution margin per handbag. = unit sales price unit variable costs. = 100 (dm + dl+ variable moh) Lecture example 1 solutions: contribution margin percentage. Or = ucm no. of units sold = 35 6000 = ,000. The point at which the volume of sales will result in: Two types of costs to consider: variable costs, fixed costs.
