Anthony Burkhardt's Ch22-PowerPoint(first half)

2 3 4 5 chapter 22 6 volumeorlevelofactivity

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Unformatted text preview: of the effects of changes of costs and volume on a company’s profits Considers the interrelationships among these five components: 1. 2. 3. 4. 5. Chapter 22-6 Volume or Level of activity Unit selling prices Variable Cost per unit Total fixed costs Sales mix Cost-Volume-Profit Assumptions Cost-Volume-Profit Assumptions Assumptions Underlying CVP Analysis: Behavior of both costs and revenues is linear throughout the relevant range of the activity All costs can be classified as either Variable or fixed with reasonable accuracy Changes in activity are the only factors that affect costs All units produced are sold. All units When more than one type of product is sold, the sales mix will remain constant (sales mix complicates CVP analysis because different (sales mix complicates CVP analysis because different products will have different cost relationships.) Chapter 22-7...
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