Cost, volume and profit - profit is being made with each...

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Cost, Volume and Profit Questions Susan Lewis 3/21/2012 Question 7: A mixed cost should be categorized into their fixed and variable components in a CVP analysis. One way is to figure out the variable and fixed component every time there is a mixed cost, but this is not used as much because of time and cost constraints. The most popular form is to figure out the variable and fixed cost on aggregated basis at the end of the period. There are different types of methods to achieve this; an example would be High-Low method, scatter diagram, and least squares regression analysis. Question 9: No I do not believe the entire CVP analysis is based on unit cost, it is a big part but it is also determined in sales volume of dollars. This can help the company determine if there needs to be changes in the sale volume or the level of activity. The unit cost can determine what
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Unformatted text preview: profit is being made with each sale that can go towards fixed cost and contribute to net income. It can give an analysis if the company is gaining profit or losing profit. It gives the business an idea of what their goals would be in the sale process. To determine the amount that needs to be sold to cover any costs. Question 14: The crossing of the total cost line and the total revenue line will show the break-even point on the CVP graph. Then at the point of the break-even, a horizontal line should be drawn to the level of activity line, and a vertical line at the break-even point should be drawn to the vertical axis. Break-even points are determined by the lines that were drawn from the plotted point to the horizontal axis and vertical axis. The level of activity will be on the horizontal axis and the dollar sales will be on the vertical axis....
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This note was uploaded on 03/27/2012 for the course BUSINESS acc220 taught by Professor ? during the Spring '12 term at University of Phoenix.

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