...CVP And Break-Even Analysis Paper CVP And Break-Even Analysis Paper Looking into opening a small business can be a daunting task but, with various opportunities for buying into a franchise, becoming a small business owner seems to be a reality for some. Each franchise provides various information pieces about their franchise to attract new owners. When someone is looking to invest in a franchise, doing your own analysis to validate the information provided by the franchise is critical in understanding whether or not the franchise is going to be as profitable as you would like. One such franchise is Snap fitness out of Minnesota and knowing the fixed cost of operating the franchise we can determine how many members are needed to break even. Also included is an analysis of achieving a $10,000 net income for a month of operations. To be a valid analysis we have included five examples of variable cost associated with a fitness center. Variable Cost As the owners of a new business, our ultimate goal is to make a profit. Profit can be measured in many ways and there are many complex techniques that can be used to calculate how much of a product or service must be sold to produce a profit. Cost Volume Profit analysis or CVP is one of the most useful ways for managers to understand the relationship between cost, volume, and profits and make competent management decisions. CVP analysis focuses on five areas: • Unit selling prices • Variable cost per unit ...
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...CVP Analysis Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. As an entrepreneur, your goal in creating a new business is to satisfy a set of customers profitably and to sell enough goods or services to satisfy your ongoing fixed costs as well as recover your initial investment. Cost-volume-profit analysis is critical for an entrepreneur to use when starting a new business. Through cost-volume-profit analysis, an entrepreneur can set prices, determine if he or she wants to add another product line, or see if the company is spending too much producing its products. Cost-Volume-Profit (or "CVP") analysis is a way to understand a business opportunity in simplified terms to help you zero in on the right set of customers to serve while minimizing risk by keeping your costs and investment as low as possible. This will help you understand if your opportunity can reach breakeven and how long it will take to recover your sunk investment. . The following paper will share the cost volume profit concept and how this practice can help the entrepreneur when they establish a new business. Concept of CVP Analysis The CVP or cost volume profit analysis is a professional accounting technique that is related to the effect of sales volume and product costs on operating profit of a business. This analysis is used to determine the break-even point of the business in addition to provides a great help to...
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...ON CVP ANALYSIS IN BANK Submitted to Dr. Harunur Rashid Professor Department of Accounting and Information Systems University of Chittagong Submitted by Md. Ariful Hoque B.B.A. (Hons.): 4th Year. Class Roll: 4541 Exam Roll: 2004 /42 Session: 2003-2004 Department of Accounting and Information Systems University of Chittagong Date of submission: August 25, 2009 Letter of Submission To Dr. Harunur Rashid Professor Department of Accounting and Information Systems University of Chittagong. Subject: Submission of Term Paper report on “CVP analysis in Bank.” Sir, With the greatest pleasure, I would like to submit my report on “CVP analysis in Bank” I have tried my best to gain practical experience and also tried to reflect the same in report with my limited scope and knowledge. I wish your hearty consideration, if there is any deviation in my report. I wish to thank for your friendly co-ordination to make the program success. Yours truly, ____________________ (Md. Ariful Hoque) B.B.A. (Hons.): 4th Year. Class Roll: 4541 Exam Roll: 2004 /42 Session: 2003-2004 Department of Accounting and Information Systems University of Chittagong PREFACE The Term Paper is a program that is common for the B.B.A. student. As students of the Commerce Faculty we got adventurous touch of the program under our department of AIS. The program...
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...used in the preparation of financial statements. Critically assess the information relayed by financial reporting. Use financial information for financial and corporate strategy purposes. #4 Cognitive domain: Evaluation [High Order of Thinking Skills] Affective domain: Characterisation LO3 #5 #6 LO4 #5 #6 MBF 1213 Managerial Accounting – MBA Major Module July/August 2013 Assignment 1 1 CENTRE FOR POST GRADUATE STUDIES YOUR TASK: Limkokwing University of Creative Technology CASE STUDY: Cost Behaviour and Cost Volume Profit Analysis 1. Using the High-Low method to estimate the per-unit variable costs and total fixed costs. 2. Using the single product setting of the Cost-Volume-Analysis (CVP) to calculate the break-even point. 3. Use CVP analysis to calculate the break-even point. 4. Prepare an income statement for the company. 5. Calculate the company’s margin of safety 6. Calculation of product units to be sold for a target profit after cost increased INSTRUCTION TO PAIR ASSIGNMENT • This assignment, which carries 20 % of the total marks for the module, is compulsory for candidates attending the LUCT MBA programme. The general assessment criteria are Substance, Originality of work, Presentation, Use of illustrations / examples, where appropriate and will be assessed based on the illustrated grading scheme. Independent research on the relevant topics is necessary and...
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...ACC 561 Accounting Week 1 to 6, Assignment, WilyPLUS, DQ, Final Purchase here http://homeworkonestop.com/ACC%20561/acc-561-accounting-week-1-to-6-assignment-wilyplus-dq-final Product Description ACC 561 Accounting WEEK 1 Individual Assignment, Financial Statement Review Paper Individual Assignment, Wileyplus BE1-7, BE1-8, BE1-9 Discussion Question 1 and 2 WEEK 2 Individual Assignment, Sarbanes-Oxley Act of 2002 Individual Assignment, Wileyplus E13-5, E13-6, E13-8, E13-9 Learning Team Summary Learning Team Reflection Discussion Question 1 and 2 WEEK 3 Individual Assignment, American Corporation Analysis Individual Assignment, Wileyplus BE15-5, E16-1, E17-9 Discussion Question 1 and 2 WEEK 4 Individual Assignment, WileyPLUS BYP17-2 Managerial Analysis Individual Assignment, Wileyplus BE18-1, BE18-7, BE18-11, E19-2 Learning Team Summary Learning Team Reflection Discussion Question 1 and 2 WEEK 5 Individual Assignment, Costing Methods paper Learning Team Assignment, CVP and Break-Even Analysis Paper Individual Assignment, Wileyplus E20-2, E20-5, BE21-4, E22-5 Learning Team Deliverable Discussion Question 1 and 2 WEEK 6 Individual Assignment, Wileyplus E23-1, E23-2 Learning Team Summary Learning Team Reflection ACC 561 Final Exam WileyPLUS (30 Q & A) ACC 561 Final Exam 2 (30 Q & A) ACC 561 Final Exam 3 (54 Q & A) ACC 561 Final Exam 4 (54 Q & A) ACC 561 Final Exam 5 (54 Q & A) ACC 561 Final Exam 6 (52 Q & A) ACC 561 Final Exam 7 (45...
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...related to CVP is crucial to the absorption of information. The paper provides a summary of Tesla Motors, the company outlined. Explaining the relationship between cost-volume-profit analysis is discussed as well as how the company is using this tool to maximize production and profit. Summary Tesla Motors, Inc. is a company based in Silicon Valley. Telsa designs, manufactures, and sells electronic cars. Telsa is a publically traded company that trades in NASDAQ stock exchange. Telsa became well known after producing the Telsa Roadster, the first fully equipped eclectic sports car. In addition, Telsa also sells power train components like lithium-ion batteries to other auto makers. According to Morris (2012), “CEO Elon Musk announced that the company has stopped burning cash and reached the break-even point, a major milestone for any start-up.”(Morris, 2012). Tesla has been producing 200 cars per week and according to the article, Tesla expected to increase that quantity to 400 cars per week by December 2012. Although Tesla has reached its break-even point, their concern at this point is to fulfill the more than 5,000 advanced orders as they understand the importance in making sure the customers get what they ordered and meeting profit goals. Weekly Objectives Relevance Two essential accounting concepts can be applied in understanding Tesla’s economic position: 1) cost – volume - profit (CVP) analysis and 2) the breakeven point. First, a cost-volume- profit (CVP) analysis...
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... The following items are included in the start-up fee: 1. Franchise Fee 2. Grand Opening Marketing 3. Leasehold Improvements 4. Utility and Rent Deposits 5. Training Many people dream of owning a business as opposed to working for another business. The benefits of owning a franchise is priceless if ran properly. This paper will show an estimate amount of variable costs and monthly sales in members and dollars for Snap Fitness. Also included are five examples of variable costs and a summary about purchasing a franchise and the decisions that come along with it. Estimate Amount of Variable Costs A Snap Fitness franchise is estimated to incur fixed operating costs of $4,000 and $2,000 to lease fitness equipment. A newspaper article providing details about fitness centers like Snap Fitness states this form of business may only require 300 members to reach its break-even point. The cost-volume-profit, also known as CVP, analysis will assist Snap Fitness in determining the effects of changes of volume and costs on the business’ profits. The CVP analysis will help the new franchise apply appropriate profit planning. The CVP analysis determines profit by subtracting total revenue from total costs. The equation separates costs into variable and fixed. The equation coverts to profit = total revenue - total variable costs - total fixed costs. The newspaper stated the average break-even point would be 300 members and each member pays a $26 monthly fee to attend...
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...ACC 561 Accounting Week 1 to 6, Assignment, WilyPLUS, DQ, Final Purchase here http://homeworkonestop.com/ACC%20561/acc-561-accounting-week-1-to-6-assignment-wilyplus-dq-final Product Description ACC 561 Accounting WEEK 1 Individual Assignment, Financial Statement Review Paper Individual Assignment, Wileyplus BE1-7, BE1-8, BE1-9 Discussion Question 1 and 2 WEEK 2 Individual Assignment, Sarbanes-Oxley Act of 2002 Individual Assignment, Wileyplus E13-5, E13-6, E13-8, E13-9 Learning Team Summary Learning Team Reflection Discussion Question 1 and 2 WEEK 3 Individual Assignment, American Corporation Analysis Individual Assignment, Wileyplus BE15-5, E16-1, E17-9 Discussion Question 1 and 2 WEEK 4 Individual Assignment, WileyPLUS BYP17-2 Managerial Analysis Individual Assignment, Wileyplus BE18-1, BE18-7, BE18-11, E19-2 Learning Team Summary Learning Team Reflection Discussion Question 1 and 2 WEEK 5 Individual Assignment, Costing Methods paper Learning Team Assignment, CVP and Break-Even Analysis Paper Individual Assignment, Wileyplus E20-2, E20-5, BE21-4, E22-5 Learning Team Deliverable Discussion Question 1 and 2 WEEK 6 Individual Assignment, Wileyplus E23-1, E23-2 Learning Team Summary Learning Team Reflection ACC 561 Final Exam WileyPLUS (30 Q & A) ACC 561 Final Exam 2 (30 Q & A) ACC 561 Final Exam 3 (54 Q & A) ACC 561 Final Exam 4 (54 Q & A) ACC 561 Final Exam 5 (54 Q & A) ACC 561 Final Exam 6 (52 Q & A) ACC 561 Final Exam 7...
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...CVP analysis: A tool for business decision making Introduction Cost-Volume-Profit Analysis (CVP), in managerial economics is a form of cost accounting. It is a simplified model, useful for elementary instruction and for short-run Cost-volume-profit (CVP) analysis expands the use of information provided by breakeven analysis. A critical part of CVP analysis is the point where total revenues equal total costs (both fixed and variable costs). At this breakeven point (BEP), a company will experience no income or loss. This BEP can be an initial examination that precedes more detailed CVP analyses.Cost-volume-profit analysis employs the same basic assumptions as in breakeven analysis. Cost-volume-profit analysis (CVP), or break-even analysis, is used to compute the volume level at which total revenues are equal to total costs. When total costs and total revenues are equal, the business organization is said to be “breaking even.” The analysis is based on a set of linear equations for a straight line and the separation of variable and fixed costs. Total variable costs are considered to be those costs that vary as the production volume changes. In a factory, production volume is considered to be the number of units produced, but in a governmental organization with no assembly process, the units produced might refer, for example, to the number of welfare cases processed. There are a number of costs that vary or change, but if the variation is not due to volume changes, it is not considered...
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...FALL-2011. Key words :managerial accounting , cost accounting , CVP. o "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL CONCEPT" 1 DR.MOADE SHUBITA "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. TOPICS TO COVER: ABSTRACT INTRODUCTION PROBLEM ASSUMPTION UNDERLYING CVP ANALYSISI THE CONTRIBUTION MARGIN. CONTRIBUTION MARGIN INCOME STATEMENT DEFINE THE BREAKEVEN POINT WHAT IS THE C.M RATIO. THE IMPORTANCE of UNIT CONTRIBUTION MARGINE DETERMINATI SOME APPLICATIONS OF CM “WHAT IF “ANALYSIS ON OF TARGET INCOME AND TAXES MOS- MARGINE OF SAFETY CHOOSING THE COST STRUCTURE TO DECREASE COST ULTIMATELY DEGREE OF OPERATING LEVERAGE DEGREE OF OPERATING LEVERAGE IMPORTANCE FOR MANAGERS SALES MIX . CASE TO STUDY. LIMITATION OF CVP CONCLOUSION REFERENCES 2 DR.MOADE SHUBITA "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. ABSTRACT: In order to cope with many planning decisions managers use cost volume profit analysis , They find it an extremely useful measurement in a variety of ways . The present paper aimed to: Increase the understanding of usefulness of CVP concept. Increase the understanding of budgets in business...
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...TABLE OF CONTENT Executive summary……….………………………………………………………2 Background…………………………………………………………………3 Analysis of company situation………………………………………………....4-8 Analysis on market situation...............…………………………………….....9-12 Swot and competitor analysis ………………………………………………12-15 New product for McDonalds………………………………………………...15- 19 Future marketing strategy..................................................................................19-21 Financial forecast............................................................................................21-22 Conclusion……………………………………………………………......22 Appendix …………………………………………………………..........23-24 References…………………………………………………………….....25 INTRODUCTION Health care system is critically important around the world. And health care industry has always been a subject area with a strong international dimension. The health-care industry incorporates several sectors that are dedicated to providing health care services and products. According to industry and market classifications the health-care industry includes health care equipment and services as well as pharmaceuticals, biotechnology and life sciences, nursing homes, providers of health care plans and home health...
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...Title of Paper Your Name Course/Number Date Instructor Name (Doctoral students must include the following on the title page instead: title, author’s name, and institution name) Title of Paper The single objective of every business is to make a profit in other words to make money. Regardless of the business rather it is a childcare business or a restaurant making money is at the top of the agenda. While there are many roles within a business the Management role is key to the environment of a business and the following functions within the business falls under the Umbrella of management. Planning, control, and performance measurement, and decision- making are typical functions that management should handle. All of these functions or tools are critical and needed to operate a business successfully and a manager should be concerned with the cost volume profit, which allows management to have visual information on the functions that fall under management. The CVP or Cost Volume Profit Analysis is a systematic tool that builds a connection the daily changes within a business, for example volume, cost, revenue, and profit are the main goals that Cost Volume Profit Analysis is concerned about. The analysis is to determine what will happen when volume, cost, revenue, and profit are changed from one level to the other. The CVP has the ability to plan the future of the business in regards to the production and sales and helps create a visible footprint...
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...MARGINAL COSTING Introduction This paper explores the use of cost accounting information for decision-making purposes. DEFINITION OF KEY TERMS Marginal cost: This is the cost of a unit of a product or service, which would be avoided if that unit or service was not produced or provided Break-even point: This is the volume of sales where there is neither profit nor loss. 1 9 6 COST ACCOUNTING S T U D Y T E X T Margin of safety: This is the excess of sales over the break-even volume in sales. It states the extent to which sales can drop before losses begin to be incurred in a firm Contribution: This is the difference between sales value and the marginal cost of sales. To understand this topic, you need to understand the topic on cost behavior first. Marginal costing is built on cost behavior and terms. Of key importance are product costs, period costs, variable costs and fixed cost. Product costs are costs identified with goods produced or purchased for resale. Such costs are initially identified as part of the value of stock and only become expenses when the stock is sold. In contrast, period costs are costs that are deducted as expenses during the current period without ever being included in the value of stock held. We saw how product costs are absorbed into the cost of units of output. Now we describe marginal costing and compare it with absorption costing. Whereas absorption costing recognizes fixed costs (usually fixed production costs) as part of the...
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...333- ACC Section C The ALLTEL Pavilion Case Strategy and CVP Analysis 1. How would you describe the competitive strategy of the ALLTEL Pavilion? Given the firm's strategy, what are the most important Key Performance Indicators (e.g., quantitative measures) for the Pavilion to track and manage if it is to achieve its goal of continuous annual growth in operating income? ALLTEL Pavilion is operated by SFX Entertainment in an outdoor atmosphere for its customers. ALLTEL attempts to create a competitive advantage as the major outdoor concert venue in the "Triangle" area of North Carolina consisting of Raleigh, Durham, and Chapel Hill. The amphitheater has art-like acoustics and video differentiating the venue with trying to keep costs budgeted for each concert. The Key Performance Indicators are based on advertising media. They have researched on the most effective advertising in each region of the state in order to maximize ticket sales with the least advertising costs, which eventually create profitability. Other items include customer satisfaction, parking, and concessions. 2.) Complete two selected cost-volume-profit analyses for the show illustrated in Exhibit 2, the KFBS Allstars: A. How many tickets must the ALLTEL Pavilion sell to break even? (Hint: don't ignore the possibility that the attendance of Comp ticket holders affects the concert's profitability.). (4:1 sales mix tickets of paying : comp) Break-Even = $0 = 4x($40.08-$3.05) + 1x($13...
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...its practical applications on business decisions. Cost Volume Profit Analysis: Relationship, impact on pricing, practical decision making strategies through CVP analysis Standard Costing and Variance analysis: concept and objectives of standard costing, advantages and limitations, variance analysis (Material, labour, overheads and sales variance), practical applications Budgeting and budgetary control mechanism Activity based costing, Responsibility Accounting Target costing Objective Objective of this course is to help student understand: 1. The essence of management accounting-effective use of the accounting information for planning, control and business decision making. 2. To use cost accounting as a managerial tool for business strategy and implementation. 3. To understand analyse the costing tools and their business application for enhancing revenue and profitability of a firm,. 4. To analyse various aspects of costing such as, marginal costing, absorption costing, allocation of costs, standard costing and variance analysis, activity based costing, target costing etc. 5. To understand the process of decision making, planning and budgeting in a business organisation. Pedagogy Lectures Discussions on case studies Term Projects and presentations Discussion and presentation on published research papers on related topics. Text book: Management Accounting: Paresh Shah, OXFORD UNIVERSITY Press, Edition, Eighth impression 2012. Reference Books: 1. ...
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