CVP analysis

Question 1

what is CVP analysis

Answer 1

C-V-P analysis usually assumes conditions of certainty, that is variable and fixed costs can be known.

Question 2

Contribution Margin

Answer 2

A reporting format where costs are reported by cost behaviour and a contribution margin is calculated

Question 3

Total Contribution Margin

Answer 3

The difference between the sales revenue and the variable costs

Question 4

Unit contribution margin

Answer 4

the difference between the sales price unit and variable cost per unit

Question 5

contribution margin ratio

Answer 5

the unit contribution divided by the unit sales price

Question 6

Contribution margin percentage

Answer 6

the unit contribution margin ratio multiplied by 100. the percentage of each sales pound available to cover fixed costs and earn a profit

Question 7

UCM

Answer 7

Unit contribution margin = price - unit variable cost

Question 8

CVP equation

Answer 8

Q = Profit + FC divided by Price-UVC aka UCM

Question 9

Breakeven units formula

Answer 9

Fixed cost divided by unit contribution margin

Question 10

Breakeven sales revenue formula

Answer 10

Fixed cost divided by Unit contribution margin divided by selling price or CM ratio

Question 11

Profit formula

Answer 11

Sales revenue - VC - FC = Profit or loss

Question 12

What is Contribution margin percentage?

Answer 12

Contribution margin percentage (contribution
margin ratio) is the contribution margin per
unit divided by the selling price.

Question 13

Cost volume profit graph

Answer 13

shows how costs revenue and profits change as sales volume changes

Question 14

Target net profit

Answer 14

FC + Profit divided by UCM = Unit sold to meet profit target

Question 15

Margin of Safety

Answer 15

The difference between budgeted sales revenue and break even sales revenue

Question 16

Historical cost?

Answer 16

a cost which has been incurred and for which there is documentary evidence. This is the cost recorded in the accounts to show the exchange of an asset or the incurring of a liability for a good or service.

Question 17

Variable costs

Answer 17

Cost which vary with some measure of activity , commonly with the number of units produced or direct labour hours.

Question 18

Budgeted cost

Answer 18

a cost expected or desired for a given period. Budgeted costs are future costs and figure heavily in management planning and control

Question 19

fixed costs

Answer 19

costs which remain unchanged despite the change in the level of acitivity

Question 20

The relevant range

Answer 20

the relevant range is the band of normal activity level in which there is a specific relationship between the level of activity and costs

Question 21

semi variable costs

Answer 21

they include both a fixed and a variable componant

Question 22

semi fixed costs

Answer 22

They are fixed within specified levels, but they eventually increase or decrease by some constant amount at critical activity levels

Question 23

Total costs formula

Answer 23

Total cost = TVC + TFC

Question 24

Manufacturing OH applied Formula

Answer 24

OH applied = POHR x Actual activity