# ch03 - ER Chapter 3 Cost-Volume-Profit Analysis and Pricing...

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3 C H AP T ER Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions Cost-Volume-Profit Analysis and Pricing Decisions Learning Objectives 1. Calculate the breakeven point in units and sales dollars. (Unit 3.1) 2. Calculate the level of activity required to meet a target income. (Unit 3.2) 3. Determine the effects of changes in sales price, cost, and volume on operating income. (Unit 3.2) 4. Define operating leverage and explain the risks associated with the tradeoff between variable and fixed costs. (Unit 3.2) 5. Calculate the multi-product breakeven point and level of activity required to meet a target income. (Unit 3.3) 6. Define markup and explain cost-plus pricing. (Unit 3.4) 7. Explain target costing and calculate a target cost. (Unit 3.4) Summary of End of Chapter Material Difficulty: E = Easy, M = Moderate, D = Difficult Bloom: K = Knowledge, C = Comprehension, AP = Application, AN = Analysis, S = Synthesis, E = Evaluation AACSB : A = Analytic, C = Communication, E = Ethics AICPA FN: DM = Decision modeling, RA = Risk Analysis, M = Measurement, R = Reporting, RS = Research, T = Technology AICPA PC: C = Communication, I = Interaction, L = Leadership, P = Professional demeanor, PM = Project Management, PS = Problem Solving and Decision Making, T = Technology IMA: BA = Business applications, BP = Budget Preparation, CM = Cost Management, DA = Decision Analysis, PM = Performance Measurement, R = Reporting, SP = Strategic Planning Item L. O. Difficulty Level Minutes to Complete Bloom’s Taxonomy AACSB AICPA FN AICPA PC IMA Ethics Coverage GUIDED UNIT PREPARATION Unit 3.1 1 1 E 2 C A DM PS DA 2 1 D 2 C A DM PS DA 3 1 M 2 K A DM PS DA 4 1 M 2 C A DM PS DA 5 1 E 2 C A DM PS DA Unit 3.2 1 2 M 3 K A DM PS DA 2 3 M 3 K A DM PS DA 3 3 E 4 K A DM PS DA 4 4 M 4 C A DM PS DA Unit 3.3 1 5 E 2 K A DM PS DA 2 5 M 3 C A DM PS DA 3 5 M 2 C A DM PS DA Unit 3.4 1 6 M 3 K A DM PS DA 2 6 M 3 K A DM PS DA 3 6 M 3 C A DM PS DA 4 7 E 3 K A DM PS DA 3-1 ph ot o: © Ti sc he nk o Iri na /S hu tte rst oc k

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Solutions for Davis & Davis, Managerial Accounting , 2 nd ed. Item L. O. Difficulty Level Minutes to Complete Bloom’s Taxonomy AACSB AICPA FN AICPA PC IMA Ethics Coverage EXERCISES 3-1 1 E 8 AN, AP A DM PS DA 3-2 1 M 10 AP A DM PS DA 3-3 1 M 10 AP A DM PS DA 3-4 2 E 5 AN, AP A DM PS DA 3-5 2 D 15 AP A DM PS DA 3-6 2 E 5 AP A DM PS DA 3-7 2 M 8 AP A DM PS DA 3-8 1, 2 M 10 AP A DM PS DA 3-9 1, 2 M 12 AP A DM PS DA 3-10 3 D 15 AP A DM PS DA 3-11 3 D 15 AN, AP A DM PS DA 3-12 1, 3 D 20 AP A DM PS DA 3-13 1, 3 D 20 AN, AP A DM PS DA 3-14 1, 2, 3 M 15 AN, AP A DM PS DA 3-15 4 M 15 AN,AP A DM PS DA 3-16 4 M 15 AP A DM PS DA 3-17 1, 4 M 10 C A DM PS DA 3-18 5 D 20 AP A DM PS DA 3-19 5 D 15 AN,AP A DM PS DA 3-20 1, 5 D 20 AP, C A DM PS DA 3-21 1, 5 M 10 AP A DM PS DA 3-22 6 M 15 AP A DM PS DA 3-23 6 M 15 AP A DM PS DA 3-24 6 M 15 AP, C A DM PS DA 3-25 7 E 8 AP, C A DM PS DA 3-26 6, 7 M 8 AP, C A DM PS DA PROBLEMS 3-27 1 M 15 AP A DM PS DA 3-28 1, 2 M 20-25 AP A DM PS DA 3-29 3 D 20-25 AP A DM PS DA 3-30 3 D 25-30 AP A DM PS DA 3-31 1, 3 D 20-25 AP A DM PS DA 3-32 1, 2, 3 M 30-40 AP, C A DM PS DA 3-33 1, 2, 3 M 25-30 AP, C A DM PS DA 3-34 2, 3 M 15 AP A DM PS DA 3-35 4 E 12 AP, AN A DM PS DA 3-36 5 D 20-25 AP, AN
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