Ch 7 ADM2341A CVP - Ch7 CVP Managerial Accounting ADM2341...

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Unformatted text preview: Ch7 CVP Managerial Accounting ADM2341 1 Ch 7. COST Ch 7. COST Behaviour Behaviour-- CVP CVP How do changes in activity affect net income? Break even point Margin of safety and operating leverage How do changes in variable costs, selling price sales mix affect the contribution margin? Ch7 CVP Managerial Accounting ADM2341 2 Sales (units) .................... 500 Sales ($s) .................250,000 VC ..........................150,000 CM ..........................100,000 FC ............................80,000 NI ........................... 20,000 NORD COMPANY Per unit $500 300 200---- Ch7 CVP Managerial Accounting ADM2341 3 Amount contributed per unit toward fixed costs and then toward profits for the period Remains constant so long as the selling price and variable cost per unit do not change CONTRIBUTION MARGIN PER UNIT (CM/UNIT) Ch7 CVP Managerial Accounting ADM2341 4 CM/Unit = (Revenue - Variable Costs)/ Units or (Selling price - Variable cost/unit) Break-Even Point (Units) Fixed Cost---------- Contribution Margin/Unit = Ch7...
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This note was uploaded on 02/03/2010 for the course ADM ADM2341 taught by Professor Edden during the Winter '09 term at University of Ottawa.

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Ch 7 ADM2341A CVP - Ch7 CVP Managerial Accounting ADM2341...

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