Questions and Answers
What is the Basic C-V-P Formula?
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?
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What does the contribution margin equation calculate?
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What is the Break-Even Sales in Units Equation?
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What is the formula for per-unit contribution margin?
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What does the Variable Cost Ratio represent?
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What is the sales revenue equation?
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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.