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CH3 - A FC/VC COST STRUCTURES B OPERATING LEVERAGE VI CVP...

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ACCT 347 LECTURE NOTE, CHAPTER # 3 C-V-P ANALYSIS I. Contribution Margin (CM) 1) CM/unit Selling Price/unit - VC/unit = CM/unit 2) CM Ratio CM/unit -------- = CM Ratio SP/unit II. CVP Assumptions III. Break-Even Point (BEP) Point of activity (volume) where total revenue and total expense are equal. Three Methods 1) Equation Method 2) CM Method 3) Graphic Approach IV. Sensitivity Analysis and Uncertainty V. COST PLANNING & CVP
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Unformatted text preview: A. FC/VC COST STRUCTURES B. OPERATING LEVERAGE VI. CVP ANALYSIS IN SVC & Nonprofit ORGANIZATIONS EX. Richard plans to sell a toy rocket at flee market. He may purchase those rockets at 50c each. The booth rental is $200. The rocket will be sold at 90c. How many rockets must be sold to break even? (First, develop CVP formula by equation method and solve)...
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