C-V-P Analysis Flashcards D196
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Questions and Answers

What is the Basic C-V-P Formula?

  • Sales Revenue - Variable Costs - Fixed Costs = Profit (correct)
  • Sales Revenue + Variable Costs - Fixed Costs = Profit
  • Sales Revenue - Fixed Costs = Variable Costs
  • Sales Revenue + Fixed Costs - Variable Costs = Profit

What is the C-V-P equation in units?

(Sales Price x Units) - (Variable Costs x Units) - Fixed Costs = Profit

What is the C-V-P equation in ratios?

Sales Revenue - (Variable Cost Ratio x Sales Revenue) - Fixed Costs = Profit

What is the break-even equation?

<p>Sales Revenue - Variable Costs - Fixed Costs = $0</p> Signup and view all the answers

What does the contribution margin equation calculate?

<p>Sales Revenue - Variable Costs</p> Signup and view all the answers

What is the Break-Even Sales in Units Equation?

<p>Total Fixed Costs / (Sales Price per Unit - Variable Cost per Unit)</p> Signup and view all the answers

What is the formula for per-unit contribution margin?

<p>(Fixed Costs + Target Income) / Contribution Margin per Unit</p> Signup and view all the answers

What does the Variable Cost Ratio represent?

<p>Variable Costs per unit / Sales Price per unit</p> Signup and view all the answers

What is the sales revenue equation?

<p>Sales Revenue = Fixed Costs + Variable Costs + Profit</p> Signup and view all the answers

Flashcards

Basic C-V-P Formula

Sales Revenue - Variable Costs - Fixed Costs = Profit. This formula helps businesses determine their profitability by subtracting all costs from total revenue.

C-V-P Equation in Units

This formula expresses the C-V-P equation in terms of the number of units sold. (Sales Price x Units) - (Variable Costs x Units) - Fixed Costs = Profit

C-V-P Equation in Ratios

This equation uses ratios to represent the relationship between revenue, variable costs, and fixed costs. Sales Revenue - (Variable Cost Ratio x Sales Revenue) - Fixed Costs = Profit

Break-Even Equation

This equation determines the sales revenue needed to cover all costs, resulting in zero profit. Sales Revenue - Variable Costs - Fixed Costs = $0

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Contribution Margin Equation

This equation calculates the contribution margin, which represents the amount of money available to cover fixed costs and generate profit. Sales Revenue - Variable Costs

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Break-Even Sales in Units Equation

This equation determines the number of units that must be sold to cover all fixed costs. Total Fixed Costs / (Sales Price per Unit - Variable Cost per Unit)

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Per-Unit Contribution Margin Formula

This equation calculates the per-unit contribution margin, which represents the amount of money generated by each individual unit sold after covering variable costs. (Fixed Costs + Target Income) / Contribution Margin per Unit

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Variable Cost Ratio

This ratio represents the proportion of each sales dollar that goes towards variable costs. Variable Costs per unit / Sales Price per unit

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Sales Revenue Equation

This equation expresses sales revenue as the sum of fixed costs, variable costs, and profit. Sales Revenue = Fixed Costs + Variable Costs + Profit

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Study Notes

Basic C-V-P Formulas

  • Profit can be calculated using the formula: Sales Revenue - Variable Costs - Fixed Costs = Profit.

C-V-P Equation in Units

  • The profit equation in units is expressed as: (Sales Price x Units) - (Variable Costs x Units) - Fixed Costs = Profit.

C-V-P Equation in Ratios

  • When analyzing C-V-P in ratios: Sales Revenue - (Variable Cost Ratio x Sales Revenue) - Fixed Costs = Profit.

Break-Even Equation

  • The break-even point occurs when total revenue covers total costs, leading to zero profit: Sales Revenue - Variable Costs - Fixed Costs = $0.

Contribution Margin Equation

  • Contribution Margin is derived from: Sales Revenue - Variable Costs.

Break-Even Sales in Units Equation

  • To find break-even sales in units: Total Fixed Costs / (Sales Price per Unit - Variable Cost per Unit).

Per-Unit Contribution Margin

  • To calculate the required sales volume for a target income: (Fixed Costs + Target Income) / Contribution Margin per Unit.

Variable Cost Ratio

  • This ratio indicates the proportion of variable costs to sales price: Variable Costs per unit / Sales Price per unit.

Sales Revenue Equation

  • The sales revenue equation is used to determine total revenue generated from sales.

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Description

Enhance your understanding of Cost-Volume-Profit (C-V-P) analysis with these flashcards. Each card presents key formulas and concepts crucial for calculating profits, break-even points, and the relationship between sales and costs. Perfect for accounting and finance students looking to strengthen their knowledge in this area.

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