C-V-P Analysis Flashcards D196

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?

Sales Revenue - Variable Costs - Fixed Costs = $0 Signup and view all the answers

What does the contribution margin equation calculate?

Sales Revenue - Variable Costs Signup and view all the answers

What is the Break-Even Sales in Units Equation?

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

What is the formula for per-unit contribution margin?

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

What does the Variable Cost Ratio represent?

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

What is the sales revenue equation?

Sales Revenue = Fixed Costs + Variable Costs + Profit Signup and view all the answers

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.

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.