CVP-Gradual

CVP-Gradual - INSTRUCTIONS Click FIRST on the tab titled

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Unformatted text preview: INSTRUCTIONS Click FIRST on the tab titled "INTRO" Not all the tabs at the bottom of this page are visible. To view them all you must use the small arrow keys that appear in the lower left-hand corner of this screen. As you click the right and left arrows, the tabs at the bottom of the page will change. CVP questions can be asked in three ways: 1) What will the new net income or sales be (in dollars or units sold)? 2) By how much will the net income or sales increase (in dollars or units sold)? 3) By what percent will the net income or sales increase ? Furthermore: CVP questions can be answered Type of Question Y using the following approaches: Answer Using this A 1) Pro-Forma income statement a) Top-down - Single divis a) with a simple contribution margin b) Top-down - Multi- divis b) with a weighted average contribution margin c) Bottom-up - Single divi d) Bottom-up - Multi- divis 2) Break-Even (CVP) Formula with the answer in dollars a) Bottom-up - Single divi a) with a simple contribution margin b) Bottom-up - Multi- divis b) with a weighted average contribution margin 3) Break-Even (CVP) Formula with the answer in units a) Bottom-up - Single divi a) with a simple contribution margin b) Bottom-up - Multi- divis b) with a weighted average contribution margin a) Top-down - Single divis 4) Short-Cut method b) Top-down - Multi- divis Click on the TABS at the bottom of this c) Bottom-up - Single divi workbook to go to progressively more d) Bottom-up - Multi- divis difficult CVP questions There are 12 Click on the button to view the 4 basic elements of an income statement You Can Approach ision - dollars or units sional - dollars or units ision - dollars or units isional - dollars or units ision - dollars isional - dollars ision - units isional - units ision - dollars or units sional - dollars or units ision - dollars or units isional - dollars or units 2 assumptions that determine what an income statement will be. Four of these determine what the other 8 assumptions will be. They are numbered (1) to (4) on the income statement below. Note that there are 2 cost assumptions (variable and fixed) . Basic Assumptions Underlying an Income Statement Whose Semi-Variable Expenses Have Been Separated Click on the bu Into Their Variable and Fixed Elements to view th In Dollars Percent Per unit possible typ of CVP Sales 200,000 100.00% $20.00 (1) questions Variable Expenses 110,000 55.00% $11.00 (2) Contribution margin 90,000 45.00% $9.00 Fixed expenses 75,000 (3) Net income 15,000 Units sold 10,000 (4) (covers, rooms, seats, etc.) Red on Yellow = The four basic assumptions Blue on Coral = The eight subsidiary assumptions whose value depends on the four basic assumptions utton e pes s SIMPLE TOP-DOWN QUESTIONS IN DOLLARS Click Simple CVP questions involve merely changing the sales goals (if question is top-down), ques or the desired net income (if questions is bottom-up), plus a change in the fixed expenses....
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CVP-Gradual - INSTRUCTIONS Click FIRST on the tab titled

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