what are the types of cost volume profit analysis?
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['Level or volume of activity.', 'Unit selling prices.', 'Variable cost per unit.', 'Total fixed costs.', 'Manpower Cost Direct and indirect.']
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The two basic types of costs incurred by businesses are fixed and variable. Fixed costs do not vary with output, while variable costs do. Fixed costs are sometimes called overhead costs. ... In a production facility, labor and material costs are usually variable costs that increase as the volume of production increases.
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For example, assume that the price of output is $2 per unit and the price of labor is $10 and the price of capital is $20. To determine the profit maximizing input level, we would first compute the marginal revenue product for each input then divide it by the resource price or marginal resource cost.
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Ratio analysis consists of calculating financial performance using five basic types of ratios: profitability, liquidity, activity, debt, and market.
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['Gross Profit Margin = Gross Profit / Revenue.', 'Net Profit Margin = Net Profit / Revenue.', 'Markup = Gross Profit / COGS.']
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The four major types of quality costs are prevention, appraisal, internal failure, and external failure.
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Operating Profit vs. Here are three formulas that demonstrate the relationship among the three measures of profitability: Operating Profit = Gross Profit – Operating Expenses – Depreciation – Amortization. Operating Profit = Net Profit + Interest Expenses + Taxes.
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['Gross profit = net sales revenue – cost of goods sold.', 'Net profit = gross revenue – (COGS + returns and exchanges + operating expenses + taxes)', 'Gross profit margin ratio = (net sales revenue – COGS) ÷ net sales revenue.']
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Product costing methods are used to assign cost to a manufactured product. The main costing methods available are process costing, job costing and direct costing. Each of these methods apply to different production and decision environments.
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['Choose a time frame. ... ', 'List your business revenue for the time period, breaking the totals down by month. ... ', 'Calculate your expenses. ... ', 'Determine your gross profit by subtracting your direct costs from your revenue.', "Figure out if you're making money."]
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Accounting profit = total revenue – explicit costs. Economic profit can be positive, negative, or zero. If economic profit is positive, there is incentive for firms to enter the market. If profit is negative, there is incentive for firms to exit the market.
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['Sales: $3,200,000.', 'Cost of goods sold: $1,920,000.', 'Gross Profit: $1,280,000.', 'Administrative overhead: $875,000.', 'Profit before interest and taxes: $405,000.', 'Interest: $32,000.', 'Taxes: $128,00.', 'Depreciation: $57,000.']
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We have discussed three different methods of allocating overhead to products—plantwide allocation, department allocation, and activity-based costing.
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To determine whether a company is profitable, pay attention to indicators such as sales revenue, merchandise expense, operating charges and net income. All these elements are part of an income statement, also known as a statement of profit and loss. Profitability is distinct from liquidity, though.
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When managers use CVP analysis to make business decisions, the following assumptions are made: All costs, including manufacturing, administrative, and overhead costs, can be accurately identified as either fixed or variable. The selling price per unit is constant.
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['Planning orientation. ... ', 'Profitability review. ... ', 'Assumptions review. ... ', 'Performance evaluations. ... ', 'Funding planning. ... ', 'Cash allocation. ... ', 'Bottleneck analysis.']
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[' Unit or Job type of production.', ' Batch type of Production.', ' Mass Production or Flow production.', ' Continuous production or Process production.']