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Ch 5 CVP

# Ch 5 CVP - VCR(variable cost ratio = VC per unit/SP per...

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Ch 5 C-V-P Monday, February 28, 2011 9:42 AM I. Absorption Costing Income Statement Sales -CGS DM, DL, VOHD, FOHD "Product costs" "inventoriable" GP -Operating Expenses V Op. Expenses, F Op. Expenses "Period costs" "noninventoriable" Operating Income Direct or Variable Costing Income Statement Sales -Variable Costs (DM, DL, VOHD, V Op. Expenses) Contribution Margin -Fixed Costs (FOHD, F Op. Expenses) Operating Income *Difference is FOHD *If production = sales, then absorption costing pi = profit = DCpi CMR (contribution margin ratio) = CM per unit/ SP per unit

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Unformatted text preview: VCR (variable cost ratio) = VC per unit/SP per unit CMR + VCR = 1 Extensions: • Taxes • Multi Products • Changing parametrics Taxes • Make the good times not as good and the bad times not as bad • X = TFC + [profit /(1-t) ] CM/unit \$ % NI before taxes 20,000 100%-Taxes 8,000 40% =NI after taxes 12,000 60% Ex)Tax = 40%, Desired NI after taxes = \$12,000; what must NI before taxes equal? = \$20,000 Break-Even Point X = TFC + profit/(1-t) CM/unit in units SP(x) = TFC + profit/(1-t) CMR in dolllars...
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Ch 5 CVP - VCR(variable cost ratio = VC per unit/SP per...

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