solution7 - Solutions for Tutorial 7 12.7 Per-unit...

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Solutions for Tutorial 7 12.7 Per-unit contribution is critical to break-even analysis in order for a company to determine how many units are required to be sold to cover the company’s fixed costs. The underlying known variable is the dollar amount of the contribution margin the company will generate from each unit sold in order to make the above calculation. Equations 12.4 and 12.6 demonstrate the calculation for EBITDA and EBIT break-even points. The term in the denominator (Price-Unit VC) represents the per-unit cash flow contribution. 12.8 Simulation analysis is like scenario analysis except that in simulation analysis an analyst typically uses a computer to examine a large number of scenarios in a short period of time. Rather than selecting individual values for each of the assumptions—such as unit sales, unit price, and unit variable costs—the analyst assumes that those assumptions can be represented by statistical distributions. The computer then draws upon the distribution of each variable
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solution7 - Solutions for Tutorial 7 12.7 Per-unit...

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