Cost, Volume, and Profit Formulas

Cost, Volume, and Profit FormulasCost-volume-profit (CVP) analysis is based on five components and the interrelationships ground tackle between them. The five components consist of volume or transmit of action mechanism, unit selling prices, covariant cost per unit, integral obstinate cost, and gross revenue flux. The volume or level of military action is the activity that causes variety shows 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 trades professionals, the miles driven cause change in the behavior of cost. The unit selling price is associate direct to profit and includes exclusively costs and expenses pertaining to growthion and sale of the product. For instance, if a product becomes unprofitable, a phoner will unload currency on each and every sale. A society mogul raise the selling price, cut production costs or discontinue the product entirely . The total restore costs ar costs a company becomes 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 give-up the ghost cars provided to the sales force, and interest on any debt the company strength 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 force-out waiver is two dollars. The two dollars cost will chit the kindred wh! ether 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.com

If you want to get a full essay, visit our page: write my paper