021210_UGBA+102B_Discussion_Section_03

# 021210_UGBA+102B_Discussion_Section_03 - UGBA 102B: Section...

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UGBA 102B: Section 3 • CVP (Cost-Volume-Profit) Analysis

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Outline Today’s Outline - Review of Lectures - Problems
CVP Analysis Lectures Review

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CVP Analysis CVP Analysis Focus on how profits are affected by: • Selling Price (P) • Sales volume (Q) • Unit Variable Cost (V) • Total Fixed Cost • Mix of Product Sold Profit = P × Q – V × Q – Fixed expenses Underlying Assumptions: & Selling price is constant. ± Costs are constant: variable (constant per unit) + fixed (constant in total) ² In multiproduct companies, the sales mix is constant. ³ In manufacturing companies, inventories do not change (units produced = units sold). Profit = Sales – Variable Exp. – Fix Exp.
\$0 \$50,000 \$100,000 \$150,000 \$200,000 \$250,000 \$300,000 \$350,000 0 100 Units CVP Graph CVP Analysis

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\$0 \$50,000 \$100,000 \$150,000 \$200,000 \$250,000 \$300,000 \$350,000 0 100 200 300 400 500 600 Total expenses Fixed expenses Units CVP Graph CVP Analysis
CVP Analysis CVP Graph \$0 \$50,000 \$100,000 \$150,000 \$200,000 \$250,000 \$300,000 \$350,000 0 100 200 300 400 500 600 Sales Total expenses Fixed expenses Units

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CVP Analysis CVP Graph Units \$0 \$50,000 \$100,000 \$150,000 \$200,000 \$250,000 0 100 200

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## This note was uploaded on 02/10/2011 for the course UGBA 102B taught by Professor Fan during the Spring '08 term at Berkeley.

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021210_UGBA+102B_Discussion_Section_03 - UGBA 102B: Section...

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