BREAK EVEN ANALYSIS.pptx - Cost-Volume-Profit Analysis A Managerial Planning Tool Learning Objectives • Identify variable and fixed costs • Define

BREAK EVEN ANALYSIS.pptx - Cost-Volume-Profit Analysis A...

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Cost-Volume-Profit Analysis: A Managerial Planning Tool
Learning Objectives Identify variable and fixed costs Define the term break- even Determine the number of units that must be sold to break even or to earn a targeted profit. Determine the amount of revenue required to break even or to earn a targeted profit.
Learning Objectives (continued) Determine the impact of the price elasticity of demand on business planning Understand the uses and assumptions of Cost- Volume-Profit (CVP) Analysis Apply the CVP analysis formula; Apply cost-volume-profit analysis in a multiple- product setting.
Learning Objectives (continued) Apply the CVP analysis in decision making and estimation under different scenarios. Explain how managers use CVP analysis in decision making Apply the use of Excel spreadsheets in manipulating financial information
Sample Questions Raised and Answered by CVP Analysis and break even analysis This is a technique which allows firms to use the relationship between Costs and Revenue to answer such questions as: How many units must be sold (or how much sales revenue must be generated) in order to break even? 2. How many units must be sold to earn a before-tax profit equal to £60,000? A before-tax profit equal to 15 percent of revenues?

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