Accounting Principles Cost-Volume-Profit参考.pptx

22Cost-Volume-ProfitLearning ObjectivesExplain variable, fixed, and mixed costs and the relevant range.1Apply the high-low method to determine the components of mixed costs.2Prepare a CVP income statement to determine contribution margin.3Compute the break-even point using three approaches.4Determine the sales required to earn target net income and determine margin of safety.5Use CVP analysis to respond to changes in the business environment.6Explain variable, fixed, and mixed costs and the relevant range.LEARNINGOBJECTIVE1Cost Behavior Analysis is the study of how specific costs respond to changes in the level of business activity.Some costs change; others remain the same.Helps management plan operations and decide between alternative courses of action.Applies to all types of businesses and entities.Starting point is measuring key business activities.LO 1Cost Behavior AnalysisCost Behavior Analysis is the study of how specific costs respond to changes in the level of business activity.Activity levels may be expressed in terms of:Sales dollars (in a retail company)Miles driven (in a trucking company)Room occupancy (in a hotel)Dance classes taught (by a dance studio)Many companies use more than one measurement base.LO 1Cost Behavior AnalysisCost Behavior Analysis is the study of how specific costs respond to changes in the level of business activity.Changes in the level or volume of activity should be correlated with changes in costs.Activity level selected is called activity or volume index.Activity index:Identifies the activity that causes changes in the behavior of costs.Allows costs to be classified as variable, fixed, or mixed.LO 1Variable CostsCosts that vary in total directly and proportionately with changes in the activity level.Example: If the activity level increases 10 percent, total variable costs increase 10 percent. Example: If the activity level decreases by 25 percent, total variable costs decrease by 25 percent.Variable costs remain the same per unit