Cost, Volume, and Profit Formulas

Cost, Volume, and Profit FormulasCost-volume-profit (CVP) analysis is based on five components and the interrelationships spinal column between them. The five components consist of volume or strickle of action mechanism, unit selling prices, covariant cost per unit, integral fossilized be, and gross revenue concoction. The volume or level of use is the activity that causes channelises in the behavior of cost. The changes should be correlated with changes in cost. For instance, Hewlett Packard (HP) provides association cars to many of its cut-rate sales professionals, the miles driven cause change in the behavior of cost. The unit selling price is colligate direct to profit and includes exclusively costs and expenses pertaining to harvest-timeion and sale of the product. For instance, if a product becomes unprofitable, a phoner will withdraw currency on each and every sale. A corporation mogul raise the selling price, cut production costs or discontinue the prod uct entirely. The total restore costs ar costs a company conveys that atomic number 18 not affected by activity. They remain unchanged, even when there atomic number 18 changes in activity. For instance, in HP, as a manufacturing company they incur fixed costs such as property taxes on all property owned, lease costs on legislate cars provided to the sales force, and interest on any debt the company competency have. The variable cost per unit is a cost a company incurs that remains unchanged per unit, even when there are changes in activity. For instance when HP manufactures a computer, the cost for the berth waiver is two dollars. The two dollars cost will cling the kindred whether HP manufacturers 500 or 5000 units. The sales mix is the issue forth of units sold of a given product relative to the total units sold by the company, the percentage be the same. An example of this is the spacious product line... If you want to get a full essay, roll it on our website: OrderCustomPaper.com

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