# Exhibit 7.5: Graph of Total Costs vs. Quantity Produced and Total Revenue vs. Quantity Sold

Size: px
Start display at page:

Download "Exhibit 7.5: Graph of Total Costs vs. Quantity Produced and Total Revenue vs. Quantity Sold"

Transcription

1 Graphical Approach to CVP Analysis (Break-Even Chart) A break-even chart is a graphical representation of the following on the same axes: 1. Fixed costs 2. Total costs at various levels of quantity produced 3. Total revenue at various levels of quantity sold The vertical axis (Y-axis) of the graph represents total cost or total revenue (in dollars) and the horizontal axis (X-axis) of the graph represents quantity of items produced or sold (in number of units). These graphs are useful tools in break-even analysis and make it easy to observe how total costs and total revenue change with the quantity produced and sold. It also makes it easy to see at which point neither profit is made nor loss is incurred in the business (i.e., break-even point) and the amount of profit or loss if the quantity produced and sold is known. Exhibit 7.5: Graph of Total Costs vs. Quantity Produced and Total Revenue vs. Quantity Sold The quantity produced and sold above the breakeven volume will result in a profit for a business while that below the break-even volume will result in a loss. As sales increase, net income becomes less negative until it equals zero (NI = 0). At this point, it reaches the break-even point. The intersection point of the two graphs represents the break-even point, where the total revenue and the total costs from the business are equal. Therefore, sales before the break-even point would result in a negative net income (NI < 0) indicating a loss, while sales after the break-even point will result in a positive net income (NI > 0), indicating a profit.

2 245 Creating and Understanding a Break-Even Chart Step I: Drawing and labelling the X-axis and Y-axis Draw a horizontal axis (X-axis) to represent the quantity (x) produced and sold. Use a suitable scale with equal incremental markings from 0 to the maximum quantity. Label the X-axis as "Quantity (x)". Draw a vertical axis (Y-axis) to represent the Total Revenue (TR) or Total costs (TC). Use a suitable scale and equal incremental markings from 0 to the maximum total revenue. Label the Y-axis as "Amount (\$)". Mark the Point "O" where the X-axis and Y-axis intersect each other. The point "O" is the origin with co-ordinates (0, 0). Step II: Drawing the Fixed Costs Line Determine the Fixed Costs (FC) and mark a point "A" to represent this amount on the Y-axis. Through this point, draw a line "AB" parallel to X-axis. This is the "Fixed Costs line". Step III: Drawing the Total Revenue Line and Total Costs Line The Total Revenue function, TR = S x, is a linear function represented by line OC. The Total Costs function, TC = (VC x) + FC, is a linear function represented by line AD. Create a table of values by choosing the two end points (x = 0 and x = maximum quantity) and their corresponding TR and TC values to draw the two lines. To confirm the linearity of each line include another value for x between the two points (as a test point) in the table of values. Step IV: Determining the break-even point, break-even volume, break-even revenue, and the profit and loss areas The point "E", where the Total Revenue line (OC) and the Total Cost line (AD) intersect is the break-even point, where there is neither profit nor loss. The break-even volume is the x-coordinate of the break-even point E. The break-even revenue is the y-coordinate of the break-even point E. Any quantity produced and sold greater than the break-even volume will generate a profit. The profit area is the section ECD, where the Total Revenue line (OC) is above the Total Costs line (AD). The amount of profit for any quantity above the break even volume is represented by the vertical distance between the two lines EC and ED. Any quantity produced and sold less than the break-even volume will generate a loss. The loss area is the section OAE, where the Total Revenue line (OC) is below the Total Cost line (AD). The amount of loss for any quantity below the break even volume is represented by the vertical distance between the two lines AE and OE. Example 7.5 (a) Creating a Break-Even Chart, Determining Break-Even Revenue and Break-Even Volume, and Computing Break-Even as Percent of Capacity (Maximum Quantity) Johnathan's company has a capacity to produce and sell 300 chairs per month. The fixed costs are \$5000 per month, variable costs are \$30 per chair, and selling price is \$70 per chair. (i) Draw a detailed break-even chart showing the fixed costs line, total costs line, total revenue line, break-even point, and (ii) Determine the break-even volume and break-even revenue, and compute the break-even as a percent of the Step I: Draw the X-axis and Y-axis as explained earlier. Step II: Drawing the Fixed Costs Line Draw the horizontal line (AB) from A (0, 5000) to represent the Fixed Costs line. Step III: Drawing the Total Revenue Line and Total Costs Line

3 246 continued. Graph the following linear functions: Total Revenue function, TR = S x = 70 x Total Costs function, TC = (VC x) + FC = (30 x) Create a table of values when x = 0 and 300 (maximum quantity) and choose x = 100 (any number in between) as the third point. x TR ,000 TC ,000 Using these coordinates, construct OC to represent the Total Revenue line and AD to represent the Total Costs line. (ii) Determining the break-even volume The x-coordinate of the break-even point (E) is 125. Therefore, the break-even volume is 125 chairs. Determining the break-even revenue The y-coordinate of the break-even point (E) is \$8750. Therefore, the break-even revenue is \$8750. Computing the break-even as a percent of the capacity Break-even volume Break-even as a percent of capacity = Capacity = 125 # 100% = 41.67% 300 Therefore, the break-even as a percent of capacity is 41.67%. Example 7.5 (b) Using Break-Even Charts for CVP Analysis Answer the following referring to Example 7.5(a). (i) What was the amount of profit or loss if 210 chairs were produced and sold in a month? (ii) What was the amount of profit or loss if 60 chairs were produced and sold in a month? (iii) What is the maximum profit that can be expected in a month?

4 247 (i) Determining the amount of profit or loss if 210 chairs were produced and sold in a month If 210 chairs were produced and sold, then this was 85 chairs above the break-even volume of 125 chairs per month; therefore, a profit was made. The amount of profit is calculated by subtracting the value for the y-coordinate in line AD (i.e., TC), from the y-coordinate in line OC (i.e., TR), when x = 210. When x = 210, TR = \$14,700, and TC = \$11,300 TR - TC = 14,700-11,300 = \$3400 Therefore, a profit of \$3400 was made by producing and selling 210 chairs in a month. (ii) Determining the profit or loss made if 60 chairs were produced and sold in a month If 60 chairs were produced and sold, then this was 65 chairs below the break-even volume of 125 chairs per month; therefore, a loss was incurred. The amount of loss is calculated by subtracting the value for the y-coordinate in line AD (i.e., TC), from the y-coordinate in line OC (i.e., TR), when x = 60. When x = 60, TR = \$4200, and TC = \$6800 TR - TC = = - \$2600 Therefore, a loss of \$2600 was made by producing and selling 60 chairs in a month. (iii) Determining the maximum profit that can be expected in a month Maximum profit can be expected at capacity, i.e., when x = 300. This is 175 chairs above the break-even volume of 125 chairs per month. The amount of profit is calculated by subtracting the value for the y-coordinate in line AD (i.e., TC), from the y-coordinate in line OC (i.e., TR), when x = 300. When x = 300, TR = 21,000 and TC = 14,000 TR - TC = 21,000-14,000 = \$7000 Therefore, \$ would be the maximum profit per month that can be expected.

5 248 Example 7.5 (c) Using Break-Even Charts for CVP Analysis when FC, VC, and S Change Answer the following referring to Example 7.5(a). If the fixed costs increased by 20% per month, variable costs increased by \$10 per chair, and Jonathan increased the selling price per chair to \$80, determine the new break-even volume and new break-even revenue. New FC = \$5000( ) = \$6000 per month New VC = \$40 per unit New S = \$80 per unit Creating the new break-even chart Drawing the New Fixed Cost Line Draw the new horizontal line (AB) from A (0, 6000) to represent the New Fixed Cost line. Drawing the New Total Revenue Line and New Total Cost Line Graph the following linear functions: Total Revenue function, TR = S x = 80 x Total Costs function TC = (VC x) + FC = (40 x) Create a table of values when x = 0 and 300 (maximum quantity) and choose x = 100 (any number in between) as the third point. x TR ,000 TC ,000 18,000 Using these coordinates, construct OC to represent the New Total Revenue line and AD to represent the New Total Cost line. Determining the new break-even volume The x-coordinate of the break-even point (E) is 150. Therefore, the break-even volume is 150 chairs. Determining the new break-even revenue The y-coordinate of the break-even point (E) is \$12,000. Therefore, the break-even revenue is \$12,000.

6 Exercises Answers to the odd-numbered problems are available at the end of the textbook 1. The market research for the production and sale of a new pair of boots indicates that it can be sold for \$185 per pair. The cost details are as follows: variable costs: \$95 per pair, fixed costs: \$8100 per period, and production capacity: 180 pairs per period. point, and b. Determine the break-even volume and break-even revenue, and compute the break-even as a percent of the production 2. The market research for the production and sale of a new dress indicates that it can be sold for \$175 per dress. The cost details are as follows: variable costs: \$85 per dress, fixed costs: \$7200 per period, and production capacity: 300 units per period. point, and production 3. Chenkowski Motors was selling an automotive component for \$170 per unit. The cost details are as follows: variable costs: \$80 per unit, fixed costs: \$6300 per period, and production capacity: 190 units per period. production c. What was the amount of profit or loss if 50 components were sold in a period? d. What is the maximum profit that can be expected in a period? 4. An electronics manufacturer was selling an electronic gadget for \$155 per unit. The cost details are as follows: variable costs: \$65 per unit, fixed costs: \$7200 per period, and production capacity: 250 units per period. production c. What was the amount of profit or loss if 150 gadgets were sold in a period? d. What is the maximum profit that can be expected in a period? 5. A firm manufactures a product which sells for \$12 per unit. The variable costs consist of two parts: the variable manufacturing costs are \$6 per unit and the variable selling costs are \$1.50 per unit. The fixed costs are \$2475 for the period. The capacity is 1500 units per period. c. What is the new break-even point in units if the fixed costs are increased by \$1095 in a period and the variable manufacturing costs per unit are decreased by 10%?

7 A machine manufacturing firm sells a small component for \$25 per unit. The variable costs consist of two parts: the variable manufacturing cost is \$12.50 per unit and the selling cost is \$2.50 per unit. The fixed cost for the period is \$3600. The capacity is 600 units per period. point, and c. What is the new break-even point in units if the fixed costs are decreased by \$625 in a period and the variable manufacturing costs per unit are increased by 10%? 7. A new product can be sold for \$165 according to market research. The variable costs are \$90 per unit, fixed costs are \$8625 per period, and the production capacity is 475 units. point, and c. What is the new break-even point in units when the selling price is decreased by \$5 and the fixed costs per period are increased to \$10,150? 8. A new product can be sold for \$175 according to market research. The variable costs are \$95 per unit, the fixed costs are \$9600 per period, and the capacity is 520 units. c. What is the new break-even point in units when the selling price is decreased by \$5 and the fixed costs per period are increased to \$10,875? 9. A publisher sells a new travel book for \$65 per book. The fixed costs are \$37,000 per year, publishing costs per book are \$40, and the royalty paid to the author is 10% of the selling price per book. The publisher has a capacity to sell 10,000 books in a year. c. If the fixed costs increased by 20% per year, publishing costs increased by \$5 per book, and the publisher increased the selling price per book to \$80, determine the new break-even volume and new break-even revenue. 10. A new cookbook is being sold for \$25 each. The publisher s fixed costs are \$25,500 per year, publishing costs are \$14 per book, and the royalty paid to the author is 10% of the selling price. The publisher has a capacity to sell 12,000 books in a year. c. If the fixed costs increased by 15% per year, publishing costs increased by \$6 per book, and the publisher increased the selling price per book to \$30, determine the new break-even volume and new break-even revenue.

### Break-even analysis. On page 256 of It s the Business textbook, the authors refer to an alternative approach to drawing a break-even chart.

Break-even analysis On page 256 of It s the Business textbook, the authors refer to an alternative approach to drawing a break-even chart. In order to survive businesses must at least break even, which

### Chapter 6: Break-Even & CVP Analysis

HOSP 1107 (Business Math) Learning Centre Chapter 6: Break-Even & CVP Analysis One of the main concerns in running a business is achieving a desired level of profitability. Cost-volume profit analysis

### Break-Even Point and Cost-Volume-Profit Analysis

9 Break-Even Point and Cost-Volume-Profit Analysis Objectives After completing this chapter, you should be able to answer the following questions: LO.1 LO.2 LO.3 LO.4 LO.5 LO.6 What is the break-even point

### Lecture 8 : Coordinate Geometry. The coordinate plane The points on a line can be referenced if we choose an origin and a unit of 20

Lecture 8 : Coordinate Geometry The coordinate plane The points on a line can be referenced if we choose an origin and a unit of 0 distance on the axis and give each point an identity on the corresponding

### Variable Costs. Breakeven Analysis. Examples of Variable Costs. Variable Costs. Mixed

Breakeven Analysis Variable Vary directly in proportion to activity: Example: if sales increase by 5%, then the Variable will increase by 5% Remain the same, regardless of the activity level Mixed Combines

### 1. Then f has a relative maximum at x = c if f(c) f(x) for all values of x in some

Section 3.1: First Derivative Test Definition. Let f be a function with domain D. 1. Then f has a relative maximum at x = c if f(c) f(x) for all values of x in some open interval containing c. The number

### Example SECTION 13-1. X-AXIS - the horizontal number line. Y-AXIS - the vertical number line ORIGIN - the point where the x-axis and y-axis cross

CHAPTER 13 SECTION 13-1 Geometry and Algebra The Distance Formula COORDINATE PLANE consists of two perpendicular number lines, dividing the plane into four regions called quadrants X-AXIS - the horizontal

### Graphing Linear Equations

Graphing Linear Equations I. Graphing Linear Equations a. The graphs of first degree (linear) equations will always be straight lines. b. Graphs of lines can have Positive Slope Negative Slope Zero slope

### Assumptions of CVP Analysis. Objective 1: Contribution Margin Income Statement. Assumptions of CVP Analysis. Contribution Margin Example

Assumptions of CVP Analysis Cost-Volume-Profit Analysis Expenses can be classified as either variable or fixed. CVP relationships are linear over a wide range of production and sales. Sales prices, unit

### Week 1: Functions and Equations

Week 1: Functions and Equations Goals: Review functions Introduce modeling using linear and quadratic functions Solving equations and systems Suggested Textbook Readings: Chapter 2: 2.1-2.2, and Chapter

### Vector Notation: AB represents the vector from point A to point B on a graph. The vector can be computed by B A.

1 Linear Transformations Prepared by: Robin Michelle King A transformation of an object is a change in position or dimension (or both) of the object. The resulting object after the transformation is called

### EQUATIONS and INEQUALITIES

EQUATIONS and INEQUALITIES Linear Equations and Slope 1. Slope a. Calculate the slope of a line given two points b. Calculate the slope of a line parallel to a given line. c. Calculate the slope of a line

### 1 Functions, Graphs and Limits

1 Functions, Graphs and Limits 1.1 The Cartesian Plane In this course we will be dealing a lot with the Cartesian plane (also called the xy-plane), so this section should serve as a review of it and its

### Chapter. Break-even analysis (CVP analysis)

Chapter 5 Break-even analysis (CVP analysis) 1 5.1 Introduction Cost-volume-profit (CVP) analysis looks at how profit changes when there are changes in variable costs, sales price, fixed costs and quantity.

### C 6 - ACRONYMS notesc6.doc Instructor s Supplemental Information Written by Professor Gregory M. Burbage, MBA, CPA, CMA, CFM

C 6 - ACRONYMS notesc6.doc Instructor s Supplemental Information ACRONYMS (ABBREVIATIONS) FOR USE WITH MANAGERIAL ACCOUNTING RELATING TO COST-VOLUME-PROFIT ANALYSIS. CM Contribution Margin in total dollars

### Accounting Building Business Skills. Learning Objectives: Learning Objectives: Paul D. Kimmel. Chapter Fourteen: Cost-volume-profit Relationships

Accounting Building Business Skills Paul D. Kimmel Chapter Fourteen: Cost-volume-profit Relationships PowerPoint presentation by Kate Wynn-Williams University of Otago, Dunedin 2003 John Wiley & Sons Australia,

### Math 1314 Lesson 8 Business Applications: Break Even Analysis, Equilibrium Quantity/Price

Math 1314 Lesson 8 Business Applications: Break Even Analysis, Equilibrium Quantity/Price Three functions of importance in business are cost functions, revenue functions and profit functions. Cost functions

### Elements of a graph. Click on the links below to jump directly to the relevant section

Click on the links below to jump directly to the relevant section Elements of a graph Linear equations and their graphs What is slope? Slope and y-intercept in the equation of a line Comparing lines on

### volume-profit relationships

Slide 1.3.1 1. Accounting for decision making 1.3 Cost-volume volume-profit relationships Slide 1.3.2 Introduction This chapter examines one of the most basic planning tools available to managers: cost

### CHAPTER 1 Linear Equations

CHAPTER 1 Linear Equations 1.1. Lines The rectangular coordinate system is also called the Cartesian plane. It is formed by two real number lines, the horizontal axis or x-axis, and the vertical axis or

Problem 1 The Parabola Examine the data in L 1 and L to the right. Let L 1 be the x- value and L be the y-values for a graph. 1. How are the x and y-values related? What pattern do you see? To enter the

### Math-in-CTE Lesson Plan: Marketing

Math-in-CTE Lesson Plan: Marketing Lesson Title: Break-Even Point Lesson 01 Occupational Area: Marketing Ed./Accounting CTE Concept(s): Math Concepts: Lesson Objective: Fixed Costs, Variable Costs, Total

### Math 113 Review for Exam I

Math 113 Review for Exam I Section 1.1 Cartesian Coordinate System, Slope, & Equation of a Line (1.) Rectangular or Cartesian Coordinate System You should be able to label the quadrants in the rectangular

### LINEAR EQUATIONS IN TWO VARIABLES

66 MATHEMATICS CHAPTER 4 LINEAR EQUATIONS IN TWO VARIABLES The principal use of the Analytic Art is to bring Mathematical Problems to Equations and to exhibit those Equations in the most simple terms that

### IV. ALGEBRAIC CONCEPTS

IV. ALGEBRAIC CONCEPTS Algebra is the language of mathematics. Much of the observable world can be characterized as having patterned regularity where a change in one quantity results in changes in other

### Algebra I Vocabulary Cards

Algebra I Vocabulary Cards Table of Contents Expressions and Operations Natural Numbers Whole Numbers Integers Rational Numbers Irrational Numbers Real Numbers Absolute Value Order of Operations Expression

### Integers (pages 294 298)

A Integers (pages 294 298) An integer is any number from this set of the whole numbers and their opposites: { 3, 2,, 0,, 2, 3, }. Integers that are greater than zero are positive integers. You can write

### Definition 8.1 Two inequalities are equivalent if they have the same solution set. Add or Subtract the same value on both sides of the inequality.

8 Inequalities Concepts: Equivalent Inequalities Linear and Nonlinear Inequalities Absolute Value Inequalities (Sections 4.6 and 1.1) 8.1 Equivalent Inequalities Definition 8.1 Two inequalities are equivalent

### ALGEBRA 2: 4.1 Graph Quadratic Functions in Standard Form

ALGEBRA 2: 4.1 Graph Quadratic Functions in Standard Form Goal Graph quadratic functions. VOCABULARY Quadratic function A function that can be written in the standard form y = ax 2 + bx+ c where a 0 Parabola

### Section 1.1 Linear Equations: Slope and Equations of Lines

Section. Linear Equations: Slope and Equations of Lines Slope The measure of the steepness of a line is called the slope of the line. It is the amount of change in y, the rise, divided by the amount of

1.2 GRAPHS OF EQUATIONS Copyright Cengage Learning. All rights reserved. What You Should Learn Sketch graphs of equations. Find x- and y-intercepts of graphs of equations. Use symmetry to sketch graphs

### a. all of the above b. none of the above c. B, C, D, and F d. C, D, F e. C only f. C and F

FINAL REVIEW WORKSHEET COLLEGE ALGEBRA Chapter 1. 1. Given the following equations, which are functions? (A) y 2 = 1 x 2 (B) y = 9 (C) y = x 3 5x (D) 5x + 2y = 10 (E) y = ± 1 2x (F) y = 3 x + 5 a. all

### Vectors. Objectives. Assessment. Assessment. Equations. Physics terms 5/15/14. State the definition and give examples of vector and scalar variables.

Vectors Objectives State the definition and give examples of vector and scalar variables. Analyze and describe position and movement in two dimensions using graphs and Cartesian coordinates. Organize and

### Lesson 4: Solving and Graphing Linear Equations

Lesson 4: Solving and Graphing Linear Equations Selected Content Standards Benchmarks Addressed: A-2-M Modeling and developing methods for solving equations and inequalities (e.g., using charts, graphs,

### 2.1 Increasing, Decreasing, and Piecewise Functions; Applications

2.1 Increasing, Decreasing, and Piecewise Functions; Applications Graph functions, looking for intervals on which the function is increasing, decreasing, or constant, and estimate relative maxima and minima.

1.3 LINEAR EQUATIONS IN TWO VARIABLES Copyright Cengage Learning. All rights reserved. What You Should Learn Use slope to graph linear equations in two variables. Find the slope of a line given two points

### Part 1: Background - Graphing

Department of Physics and Geology Graphing Astronomy 1401 Equipment Needed Qty Computer with Data Studio Software 1 1.1 Graphing Part 1: Background - Graphing In science it is very important to find and

### The term used for the relative proportion in which a company's products are sold is:

The term used for the relative proportion in which a company's products are sold is: profit ~ Your answer is correct. break-even sales price The correct answer Is shown. In order to convert the margin

### Microeconomics and mathematics (with answers) 5 Cost, revenue and profit

Microeconomics and mathematics (with answers) 5 Cost, revenue and profit Remarks: = uantity Costs TC = Total cost (= AC * ) AC = Average cost (= TC ) MC = Marginal cost [= (TC)'] FC = Fixed cost VC = (Total)

### Plot the following two points on a graph and draw the line that passes through those two points. Find the rise, run and slope of that line.

Objective # 6 Finding the slope of a line Material: page 117 to 121 Homework: worksheet NOTE: When we say line... we mean straight line! Slope of a line: It is a number that represents the slant of a line

### Principles of Economics: Micro: Exam #2: Chapters 1-10 Page 1 of 9

Principles of Economics: Micro: Exam #2: Chapters 1-10 Page 1 of 9 print name on the line above as your signature INSTRUCTIONS: 1. This Exam #2 must be completed within the allocated time (i.e., between

### Session 07. Cost-Volume-Profit Analysis

Session 07 Cost-Volume-Profit Analysis Programme : Executive Diploma in Business & Accounting (EDBA 2014) Course : Cost Analysis in Business Lecturer : Mr. Asanka Ranasinghe BBA (Finance), ACMA, CGMA Contact

### Functions. MATH 160, Precalculus. J. Robert Buchanan. Fall 2011. Department of Mathematics. J. Robert Buchanan Functions

Functions MATH 160, Precalculus J. Robert Buchanan Department of Mathematics Fall 2011 Objectives In this lesson we will learn to: determine whether relations between variables are functions, use function

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Firms that survive in the long run are usually those that A) remain small. B) strive for the largest

### Vocabulary Words and Definitions for Algebra

Name: Period: Vocabulary Words and s for Algebra Absolute Value Additive Inverse Algebraic Expression Ascending Order Associative Property Axis of Symmetry Base Binomial Coefficient Combine Like Terms

### Chapter 6 Cost-Volume-Profit Relationships

Chapter 6 Cost-Volume-Profit Relationships Solutions to Questions 6-1 The contribution margin (CM) ratio is the ratio of the total contribution margin to total sales revenue. It can be used in a variety

### -2- Reason: This is harder. I'll give an argument in an Addendum to this handout.

LINES Slope The slope of a nonvertical line in a coordinate plane is defined as follows: Let P 1 (x 1, y 1 ) and P 2 (x 2, y 2 ) be any two points on the line. Then slope of the line = y 2 y 1 change in

### Chapter 10 Revenue, costs and break-even analysis

Chapter 10, costs and break-even analysis, costs and break-even analysis is the money a business makes from sales. In other words, it is the value of the sales and is also referred to as turnover. The

### Linear Equations and Inequalities

Linear Equations and Inequalities Section 1.1 Prof. Wodarz Math 109 - Fall 2008 Contents 1 Linear Equations 2 1.1 Standard Form of a Linear Equation................ 2 1.2 Solving Linear Equations......................

### Their point of intersection is the break-even point. The graph. Loss at right represents a break-even situation.

Chapter Financial arithmetic 17 Break-even analysis The success or failure of any business enterprise can be expressed mathematically as follows: P = R C or L = C R where: P = profit made by a business

### Chapter 19 (4) Cost Behavior and Cost-Volume-Profit Analysis Study Guide Solutions Fill-in-the-Blank Equations

Chapter 19 (4) Cost Behavior and Cost-Volume-Profit Analysis Study Guide Solutions Fill-in-the-Blank Equations 1. Variable cost per unit 2. Fixed cost 3. Variable costs 4. Contribution margin 5. Change

### Chapter 03.00F Physical Problem for Nonlinear Equations Industrial Engineering

Chapter 3.F Physical Problem for Nonlinear Equations Industrial Engineering Problem Statement You have been recently employed by a start-up computer assembly company called the MOM AND POP COMPUTER SHOP.

### Managerial Accounting Prof. Dr. Vardaraj Bapat Department of School of Management Indian Institute of Technology, Bombay

Managerial Accounting Prof. Dr. Vardaraj Bapat Department of School of Management Indian Institute of Technology, Bombay Lecture - 26 Cost Volume Profit Analysis Dear participations in our early session,

### 01 In any business, or, indeed, in life in general, hindsight is a beautiful thing. If only we could look into a

01 technical cost-volumeprofit relevant to acca qualification paper F5 In any business, or, indeed, in life in general, hindsight is a beautiful thing. If only we could look into a crystal ball and find

### In this chapter, you will learn to use cost-volume-profit analysis.

2.0 Chapter Introduction In this chapter, you will learn to use cost-volume-profit analysis. Assumptions. When you acquire supplies or services, you normally expect to pay a smaller price per unit as the

### Cost-Volume-Profit Analysis

Cost-Volume-Profit Analysis Cost-Volume-Profit Assumptions and Terminology 1 Changes in the level of revenues and costs arise only because of changes in the number of product (or service) units produced

### Algebra 2 Chapter 1 Vocabulary. identity - A statement that equates two equivalent expressions.

Chapter 1 Vocabulary identity - A statement that equates two equivalent expressions. verbal model- A word equation that represents a real-life problem. algebraic expression - An expression with variables.

### Revision point: Fixed costs are those that do not change with changes in production levels, e.g. rent.

SECTION ONE BREAK-EVEN ANALYSIS Break-even point What is meant by the term break even? A firm breaks even when income is sufficiently high to exactly cover total costs therefore neither a profit nor a

### chapter Behind the Supply Curve: >> Inputs and Costs Section 2: Two Key Concepts: Marginal Cost and Average Cost

chapter 8 Behind the Supply Curve: >> Inputs and Costs Section 2: Two Key Concepts: Marginal Cost and Average Cost We ve just seen how to derive a firm s total cost curve from its production function.

### Breakeven, Leverage, and Elasticity

Breakeven, Leverage, and Elasticity Dallas Brozik, Marshall University Breakeven Analysis Breakeven analysis is what management is all about. The idea is to compare where you are now to where you might

### List the elements of the given set that are natural numbers, integers, rational numbers, and irrational numbers. (Enter your answers as commaseparated

MATH 142 Review #1 (4717995) Question 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Description This is the review for Exam #1. Please work as many problems as possible

### 1.4 Linear Models. Cost, Revenue, and Profit Functions. Example 1 Linear Cost Function

16314_02_ch1_p033-112.qxd 7/17/06 4:10 PM Page 66 66 Chapter 1 Functions and Linear Models 77. If y and x are related by the linear expression y = mx + b, how will y change as x changes if m is positive?

### What are the place values to the left of the decimal point and their associated powers of ten?

The verbal answers to all of the following questions should be memorized before completion of algebra. Answers that are not memorized will hinder your ability to succeed in geometry and algebra. (Everything

### 7.4A/7.4B STUDENT ACTIVITY #1

7.4A/7.4B STUDENT ACTIVITY #1 Write a formula that could be used to find the radius of a circle, r, given the circumference of the circle, C. The formula in the Grade 7 Mathematics Chart that relates the

### Revenue Structure, Objectives of a Firm and. Break-Even Analysis.

Revenue :The income receipt by way of sale proceeds is the revenue of the firm. As with costs, we need to study concepts of total, average and marginal revenues. Each unit of output sold in the market

### Let s explore the content and skills assessed by Heart of Algebra questions.

Chapter 9 Heart of Algebra Heart of Algebra focuses on the mastery of linear equations, systems of linear equations, and linear functions. The ability to analyze and create linear equations, inequalities,

### Part II Management Accounting Decision-Making Tools

Part II Management Accounting Decision-Making Tools Chapter 7 Chapter 8 Chapter 9 Cost-Volume-Profit Analysis Comprehensive Business Budgeting Incremental Analysis and Decision-making Costs Chapter 10

### Accounting 610 2C Cost-Volume-Profit Relationships Page 1

Accounting 610 2C Cost-Volume-Profit Relationships Page 1 I. OVERVIEW A. The managerial accountant uses analytical tools to advise line managers in decision making functions. C-V-P (CVP) analysis provides

### Summary. Chapter Five. Cost Volume Relations & Break Even Analysis

Summary Chapter Five Cost Volume Relations & Break Even Analysis 1. Introduction : The main aim of an undertaking is to earn profit. The cost volume profit (CVP) analysis helps management in finding out

### 3.3 Applications of Linear Functions

3.3 Applications of Linear Functions A function f is a linear function if The graph of a linear function is a line with slope m and y-intercept b. The rate of change of a linear function is the slope m.

### Acquisition Lesson Planning Form Key Standards addressed in this Lesson: MM2A2c Time allotted for this Lesson: 5 Hours

Acquisition Lesson Planning Form Key Standards addressed in this Lesson: MM2A2c Time allotted for this Lesson: 5 Hours Essential Question: LESSON 2 Absolute Value Equations and Inequalities How do you

### The Profit Function: A Pedagogical Improvement For Teaching Operating Breakeven Analysis

The Profit Function: A Pedagogical Improvement For Teaching Operating Breakeven Analysis Bruce D. Bagamery, Central Washington University - Lynnwood Abstract This paper presents a graphical approach for

### Chapter 2: Computer Aided Manufacturing TECH 4/53350 1

Chapter 2: CNC Fundamentals & Vocabulary Computer Aided Manufacturing TECH 4/53350 1 CNC Learning objectives The Cartesian Coordinate System Motion Direction of CNC Mill and Lathe Types of Coordinate System

### Cost VOLUME RELATIONS & BREAK EVEN ANALYSIS

1. Introduction The cost volume profit (CVP) analysis helps management in finding out the relationship of costs and revenues to profit. Cost depends on various factors like Volume of production Product

### CONVERT QUADRATIC FUNCTIONS FROM ONE FORM TO ANOTHER (Standard Form <==> Intercept Form <==> Vertex Form) (By Nghi H Nguyen Dec 08, 2014)

CONVERT QUADRATIC FUNCTIONS FROM ONE FORM TO ANOTHER (Standard Form Intercept Form Vertex Form) (By Nghi H Nguyen Dec 08, 2014) 1. THE QUADRATIC FUNCTION IN INTERCEPT FORM The graph of the quadratic

### EdExcel Decision Mathematics 1

EdExcel Decision Mathematics 1 Linear Programming Section 1: Formulating and solving graphically Notes and Examples These notes contain subsections on: Formulating LP problems Solving LP problems Minimisation

### MANAGEMENT ACCOUNTING Cost-Volume-Profit Analysis

MANAGEMENT ACCOUNTING Cost-Volume-Profit Analysis Zofia Krokosz-Krynke, Ph.D., MBA zofia.krokosz-krynke@pwr.edu.pl Wroclaw University of Technology, Building B4 Room 521 http://www.ioz.pwr.edu.pl/pracownicy/krokosz/

### Solving Simultaneous Equations and Matrices

Solving Simultaneous Equations and Matrices The following represents a systematic investigation for the steps used to solve two simultaneous linear equations in two unknowns. The motivation for considering

### AP CALCULUS AB 2008 SCORING GUIDELINES

AP CALCULUS AB 2008 SCORING GUIDELINES Question 1 Let R be the region bounded by the graphs of y = sin( π x) and y = x 4 x, as shown in the figure above. (a) Find the area of R. (b) The horizontal line

### 11 PERFECT COMPETITION. Chapter. Competition

Chapter 11 PERFECT COMPETITION Competition Topic: Perfect Competition 1) Perfect competition is an industry with A) a few firms producing identical goods B) a few firms producing goods that differ somewhat

### 5-3 Polynomial Functions. not in one variable because there are two variables, x. and y

y. 5-3 Polynomial Functions State the degree and leading coefficient of each polynomial in one variable. If it is not a polynomial in one variable, explain why. 1. 11x 6 5x 5 + 4x 2 coefficient of the

### Equations. #1-10 Solve for the variable. Inequalities. 1. Solve the inequality: 2 5 7. 2. Solve the inequality: 4 0

College Algebra Review Problems for Final Exam Equations #1-10 Solve for the variable 1. 2 1 4 = 0 6. 2 8 7 2. 2 5 3 7. = 3. 3 9 4 21 8. 3 6 9 18 4. 6 27 0 9. 1 + log 3 4 5. 10. 19 0 Inequalities 1. Solve

### 1 Solve problems using. 2 Use functions to model. 3 Perform a break-even SECTION PROBLEM SOLVING AND BUSINESS APPLICATIONS USING SYSTEMS OF EQUATIONS

178 Chapter 3 Systems of Linear Equations SECTION 3.2 PROBLEM SOLVING AND BUSINESS APPLICATIONS USING SYSTEMS OF EQUATIONS Objectives 1 Solve problems using systems of equations. 2 Use functions to model

### 2013 MBA Jump Start Program

2013 MBA Jump Start Program Module 2: Mathematics Thomas Gilbert Mathematics Module Algebra Review Calculus Permutations and Combinations [Online Appendix: Basic Mathematical Concepts] 2 1 Equation of

### Tennessee Department of Education. Task: Sally s Car Loan

Tennessee Department of Education Task: Sally s Car Loan Sally bought a new car. Her total cost including all fees and taxes was \$15,. She made a down payment of \$43. She financed the remaining amount

### COST & BREAKEVEN ANALYSIS

COST & BREAKEVEN ANALYSIS http://www.tutorialspoint.com/managerial_economics/cost_and_breakeven_analysis.htm Copyright tutorialspoint.com In managerial economics another area which is of great importance

### MODERN APPLICATIONS OF PYTHAGORAS S THEOREM

UNIT SIX MODERN APPLICATIONS OF PYTHAGORAS S THEOREM Coordinate Systems 124 Distance Formula 127 Midpoint Formula 131 SUMMARY 134 Exercises 135 UNIT SIX: 124 COORDINATE GEOMETRY Geometry, as presented

### Learning Objectives for Section 1.1 Linear Equations and Inequalities

Learning Objectives for Section 1.1 Linear Equations and Inequalities After this lecture and the assigned homework, you should be able to solve linear equations. solve linear inequalities. use interval

### Chapter 2 An Introduction to Forwards and Options

Chapter 2 An Introduction to Forwards and Options Question 2.1. The payoff diagram of the stock is just a graph of the stock price as a function of the stock price: In order to obtain the profit diagram

### Section 12.1 Financial Ratios Section 12.2 Break-Even Analysis

Section 12.1 Financial Ratios Section 12.2 Break-Even Analysis OBJECTIVES Explain what a financial ratio is Describe how income statements are used for financial analysis Compare operating ratios and return-on-sales

### Chapter 25 Cost-Volume-Profit Analysis Questions

Chapter 25 Cost-Volume-Profit Analysis Questions 1. Cost-volume-profit analysis is used to accomplish the first step in the planning phase for a business, which involves predicting the volume of activity,

### The Point-Slope Form

7. The Point-Slope Form 7. OBJECTIVES 1. Given a point and a slope, find the graph of a line. Given a point and the slope, find the equation of a line. Given two points, find the equation of a line y Slope

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Chapter 11 Perfect Competition - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Perfect competition is an industry with A) a

### Graphing Information

Parts of a Typical Graph Graphing Information In the typical graph used to evaluate behavior, time and behavior are the two variables considered. Each data point on a graph gives two pieces of information:

### Notes for EER #4 Graph transformations (vertical & horizontal shifts, vertical stretching & compression, and reflections) of basic functions.

Notes for EER #4 Graph transformations (vertical & horizontal shifts, vertical stretching & compression, and reflections) of basic functions. Basic Functions In several sections you will be applying shifts

### 7.1 Graphs of Quadratic Functions in Vertex Form

7.1 Graphs of Quadratic Functions in Vertex Form Quadratic Function in Vertex Form A quadratic function in vertex form is a function that can be written in the form f (x) = a(x! h) 2 + k where a is called

### averages simple arithmetic average (arithmetic mean) 28 29 weighted average (weighted arithmetic mean) 32 33

537 A accumulated value 298 future value of a constant-growth annuity future value of a deferred annuity 409 future value of a general annuity due 371 future value of an ordinary general annuity 360 future

### Algebra 1 Practice Keystone Exam

Algebra 1 Practice Keystone Exam 1. Which of the following inequalities is true for ALL real values of x? a. x 3! x 2 b. 3x 2! 2x 3 c. (2x) 2! 3x 2 d. 3(x! 2) 2 " 3x 2! 2 2. An expression is shown to the