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Unformatted text preview: ACCT 250 ACCOUNTING FOR DECISION MAKING NOTES CHAPTER 7A SPRING 2008 N = operating profit a) Breakeven in unit sales How many units must HFI produce to breakeven (operating profits = zero) Equation approach use basic CVP formula Contribution margin method an alternate approach Q = (F + N) / (p - v) b) Breakeven in total sales How much total sales ($) must HFI achieve to breakeven Equation approach use basic CVP formula replacing Q with Y/p pQ = F + vQ + N becomes Y = F + ((v/p)Y) + N Contribution margin method an alternate approach Q = (F + N) / (p - v) becomes Y = (F + N) / ((p v) / p) 4bde407feb57f1d40cb11e3a6b6a219558591acf.doc PAGE 2 OF 3 ACCT 250 ACCOUNTING FOR DECISION MAKING NOTES CHAPTER 7A SPRING 2008 3) Target profit use same formulas as above, but substitute desired OI for N 4bde407feb57f1d40cb11e3a6b6a219558591acf.doc PAGE 3 OF 3...
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- Spring '08
- Decision Making