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Feb+3+ch6

# Feb+3+ch6 - ,2012 HoytShe Whatyouneedtoknow Basic...

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Managerial Accounting Discussion Session Feb 3, 2012 Hoyt She

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What you need to know… Basic Cost-Volume-Profit Analysis What’s Contribution Margin and Contribution Margin Ratio Prepare and interpret a CVP and profit graph Calculate level of sales necessary to attain a profit level Break-even calculation Calculate Contribution Margin, Contribution Margin Ratio, Breakeven point (Unit Sales and Dollar Sales) What if the followings are changed? (Variable Costs, Fixed Costs, Selling Price, and Volume Change) What if the sales commissions are changed?
Basics of Cost-Volume-Profit Analysis CM is used first to cover fixed expenses. Any remaining CM contributes to net operating income. Sales (500 bicycles) 250,000 \$ Less: Variable expenses 150,000 Contribution margin 100,000 Less: Fixed expenses 80,000 Net operating income 20,000 \$ Racing Bicycle Company Contribution Income Statement For the Month of June

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CVP Relationships in Equation Form Profit = (Sales – Variable expenses) – Fixed expenses
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Feb+3+ch6 - ,2012 HoytShe Whatyouneedtoknow Basic...

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