# Exam II Accounting 2

**Discipline:** Accounting

**Type of Paper:** Question-Answer

**Academic Level:** Undergrad. (yrs 3-4)

**Paper Format:** APA

**Pages:**1

**Words:**275

Question

Cost-Volume profit analysis

**Is a decision making tool that focuses on the relationship among the volume and mix of units sold, prices, and variable costs, fixed costs, and profit.**

Assumptions of cost volume profit analysis

CVP analysis can be useful in deciding

**can be used form”what if” analysis****allows managers to see how changing one variable can impact another****can be used to make many different decisions**

Basic CVP analysis method

**Profit Equation Method****unit contribution margin method****contribution margin ratio method**

Break even analysis

**Solving for the sales level needed to achieve a profit of zero is break even analysis**

Contribution Margin

**The contribution margin is the difference between sales revenue and variable cost or the amount of profit available to cover fixed cost and profit.****Contribution margin equals sales minus ALL variable costs.****cover fixed cost and profit**

CVP can answer

**How net income can be increased**

Cost structure

**Cost structure refers to how a company uses fixed and variable cost in an organization**

Operating Leverage

**Decisions about whether to use fixed or variable cost to run a business impact of companies operating leverage**

sales Mix

**When preparing a multi product break even analysis the assumption is ordinarily made that the sales mix or not change**

Units sold

Cost-Volume profit analysis

**Is a decision making tool that focuses on the relationship among the volume and mix of units sold, prices, and variable costs, fixed costs, and profit.**

Assumptions of cost volume profit analysis

CVP analysis can be useful in deciding

**can be used form”what if” analysis****allows managers to see how changing one variable can impact another****can be used to make many different decisions**

Basic CVP analysis method

**Profit Equation Method****unit contribution margin method****contribution margin ratio method**

Break even analysis

**Solving for the sales level needed to achieve a profit of zero is break even analysis**

Contribution Margin

**The contribution margin is the difference between sales revenue and variable cost or the amount of profit available to cover fixed cost and profit.**- Contribution margin equals sales minus ALL variable costs.
**cover fixed cost and profit**

CVP can answer

**How net income can be increased**

Cost structure

**Cost structure refers to how a company uses fixed and variable cost in an organization**

Operating Leverage

**Decisions about whether to use fixed or variable cost to run a business impact of companies operating leverage**

sales Mix

**When preparing a multi product break even analysis the assumption is ordinarily made that the sales mix or not change**

Units sold

**The weighted average unit contribution margin is the average unit contribution margin of multiple products waited according to units sold**

Weighted
average contribution margin ratio Reflects the contribution

**margin ratio of two products weighted according to the related the percentage of total sales revenue.****It is the average unit contribution margin of multiple products waiting according to the percentage of units sold**Product mix

**When multiple products are sold the break even point depends on the product mix**

The break-even point can be affected by ______.

**sales mix****total fixed costs****product mix**

CVP variable relationships