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Management Science > TECH 303 > Flashcards

TECH 303 Flashcards

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1
Q

CVP Analysis stand for?

A

Cost-Volume- Profit Analysis

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2
Q

Also commonly referred to as BREAK -EVEN analysis

A

Cost-Volume Profit Analysis

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3
Q

It is a way for companies to determine how changes in cost (both variable and fixed) and volume sales affect a company’s profit

A

Cost-Volume Analysis

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4
Q

Assimptions of CVP analysis

A
  • The sales price per unit doesn’t change
  • Variable Costs per unit don’t change
  • Total fixed Cost are constant
  • The company assumes that it has sold all the units it has produced
  • Changes in expenses occur because of changes in activity level
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5
Q

The main Components of CVP Analysis are:

A
  1. Fixed Costs
  2. Variable Costs
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6
Q

These are the costs that don:t fluctuate with sales or product changes

A

Fixed Costs

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7
Q

Example of Fixed Cost

A

Rent
Advertising

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8
Q

These are the costs that change as the quantity of products changes.

A

Variable Costs

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9
Q

Example of Variable Costs

A

Direct Materials
Direct Labor

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10
Q

This is the difference between total variable costs and a companys total revenue

A

Contribution Margin

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11
Q

This is the contribution margin expressed as a percentage

A

Contribution Ratio

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12
Q

This is the number of products that business sell during a specific period

A

Sales volume

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13
Q

This is the amount a customer pays for the product

A

Selling Price

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14
Q

This is the number of products that business selll during a specific period

A

Sales Volume

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15
Q

This is when the total costs and revenue are equal, meaning the business is neither making a loss nor a profit (Net Income:0)

A

Break-Even Point

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16
Q

This is when the total costs and revenue are equal, meaning the business is neither making a loss nor a profit (Net Income:0)

A

Break-Even Point

17
Q

This is the amount a customer pays for the product

A

Selling Price

18
Q

It is quite common for companies to want to estimate how their out income will change with changes in sales behavior

A

Changes in Net Income (What- if Analysis)

19
Q

Is the difference between yor gross Revenue and your break-even point

A

The Margin of Safety

20
Q

The product Selling Price less the Variable costs associated with producing that product

A

Contributuon Margin

21
Q

It follows the order of revenies minus cost of good sold and gives gross margin, while revenues minus expenses lead to net incom

A

Regular Income Statement

22
Q

Follows similar concept (Regular IT) but uses different format by separating fixed Cost and Variable Cost

A

Contribution Margin Income Statement

23
Q

What is the formula of Contribution margin

A

CM= Selling Price - Variable Cost
CM= Fixed Costs + Net Income

24
Q

Formula ( Contribution Margin Ration)

A

CM= Contribution Margin/ Total Sales

25
Q

Break-Even Point Formula

A

Total Contibution Margin= Total Fixed Costs

26
Q

BEP in unit Formula

A

BEP/unit= Total Fixed Cost/ Contibution Margin/ unit

27
Q

BEPin Sales Formula

A

BEPin peso= Total Fixed Costs/Contribution Margin Ratio

28
Q

Target Sales in unit Formula

A

No. of units= (Fixed Cost+ Target Profit)/Contribution Margin/ unit

29
Q

Margin of Safety Formula

A

Margin of safety= Actual Sales- Break-Even Point in Sales

30
Q

This is the Variable Cost expressed in percentage

A

Variable Cost Ratio

31
Q

Variable Cost Ration Formula

A

VCr= Variable Cost/Total Sales

32
Q

First Step to take when CVP Analaysis to help make decision

A

Identify which costs are Variable and Fixed.

33
Q

CVP Analysis belongs to

A
  1. Managerial Accounting
34
Q

Managerial Accounting Reports are for internal users and bot vound by financial Accounting standards

A

TRUE

35
Q

Margin where it is safe from loss

A

Amount between Break-Even Point and the Actual Sales

36
Q

An increase of Contribution Margin is an Increase of Break-Even Point

A

TRUE

37
Q

Refers to the proportion of the companys total sales for each type of product sold

A

Sales Mix

38
Q

The intersection of Total cost and total revenue

A

BEP

39
Q

ASSUMPTIONS OF CVP ANALYSIS

A

-The Sales Price per unit doesn’t change
- Variable Costs per unit don’t change
- Total fixed cost are constant
- The company assumes that it has sold all the unit it has produced
- Changes in expenses occur because of changes in activity level

Management Science (3 decks)

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