Lecture_CVP_Oct_31_2006 - ORIE 350 October 31, 2006 CVP...

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ORIE 350 October 31, 2006 CVP
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Prelim Today @ 7:30 PM A - Lee Hollister Hall Room B-14 Leland - Z Kimball Hall Room B-11 (bring ID) Homework #4 through #8 inclusive is on the exam.
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Cost-Volume-Profit Analysis CVP analysis , often referred to as break-even analysis, examines the interrelationship of sales activity, prices, costs, and profits in planning and decision-making situations. The break-even point is the point where revenues and expenses are equal. An organization's costs are categorized into variable and fixed components before beginning the analysis.
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Assumptions of CVP Analysis Selling price is constant. Costs are linear and can be accurately divided into fixed and variable elements. In manufacturing companies, inventories do not change (units produced = units sold).
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We can analyze the situation graphically, but actual numbers are difficult to read off of the graph. Algebraic solution makes a lot more sense
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Lecture_CVP_Oct_31_2006 - ORIE 350 October 31, 2006 CVP...

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