CVP Analysis And Relevenr Costing Flashcards
0
Q
What is the break even point ?
A
The level of production at which total sales equal total costs (fixed and variable)
1
Q
The cvp equation is p=(s x X) - fx - (vc x X) what does each letter mean
A
P=estimated profit S= selling price per product X= number of units produced and sold Fc= total fixed costs Vc= variable cost per product
2
Q
Break even equation is (S x X) = 0 +FC + VC x X what does this mean
A
Zero profit= (sales revenue) - (fixed cost + variable costs)
3
Q
What is the contribution margin ?
A
The contribution that the sale of each unit makes towards covering fixed costs. Difference between selling price and variable costs.
4
Q
Equation of Margin of safety is …
A
Actual or budgeted sales - break-even sales.
5
Q
Relevant information is…
A
The future costs and income that relate specifically to each of the alternative options being considered.
6
Q
5 qualitative factors are…
A
Customers Employees Competitors Legal constraints Suppliers
