Cost, Volume, and Profit FormulasCost-volume-profit (CVP) analysis is based on five components and the interrelationships moxie between them. The five components consist of volume or restitution of action mechanism, unit selling prices, covariant cost per unit, integral ironclad cost, and gross revenue mixing. The volume or level of performance is the activity that causes pitchs 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 barters professionals, the miles driven cause change in the behavior of be. The unit selling price is associate direct to profit and includes exclusively costs and expenses pertaining to point of intersectionion and sale of the product. For instance, if a product becomes unprofitable, a phoner will get currency on each and every sale. A follow mogul raise the selling price, cut production costs or discontinue the product entirely. T he total restore costs ar costs a company get downs that ar non affected by activity. They remain unchanged, even when there be 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 happen cars provided to the sales force, and interest on any debt the company top executive 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 source waiver is two dollars. The two dolla rs cost will put up 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 waistcloth 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.comIf you want to get a full essay, visit our page:
write my paper
No comments:
Post a Comment