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C-V-P Equations

C-V-P Equations.

9. What is the basic C-V-P equation? What is a more detailed version of this equation?
10. What is the contribution margin, and why is it important for managers to know the contribution margins of their products?
11. How much will profits increase for every unit sold over the break-even point?
12. What is the major advantage of using C-V-P graphs?
13. When other factors are constant, what is the effect on profits of an increase in fixed costs? Of a decrease in variable costs?
14. What are the limiting assumptions of C-V-P analysis?


Solution Preview

Total Sales - Total Costs = Net income
(Sales price x units sold) - (Variable cost per unit x units sold) - fixed costs = net income

Contribution margin is the difference between the total sales and total variable costs, and it is
important for managers to know the ...

Solution Summary

This solution is comprised of answers regarding C-V-P equations and analysis.