Chapter 5 Study Plan

Study Plan: Cost-Volume-Profit (CVP) Analysis

Knowledge Targets

I can define the following terms as they relate to our unit:

Contribution margin Fixed Costs Variable Costs Profit
Break even point Margin of safety Targeted Income

Contribution margin ratio

Reasoning Targets

  • I can identify costs as fixed or variable.
  • I can explain how changes in volume affect contribution margin.
  • I can explain the significance of margin of safety.
  • I can explain the importance of calculating break even point.

Skill Targets

  • I can calculate contribution margin and contribution margin ratio.
  • I can determine the break even point in units and dollars.
  • I can calculate the level of sales necessary to achieve a targeted income or profit.

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