LIBRARY RESEARCH ASSIGNMENT

Library Research Assignment



Library Research Assignment

Question 1:

The cost-volume-profit (CVP) provides a panoramic view of the financial planning process. The CVU is formed on the simplifying assumptions about the behavior of costs (Faulkner, 1993).

Cost factors - factors factor income is defined as a change cost factor that will cause a change in the total cost of a related cost object. An income factor is anything that affects revenue. There are many factors of income such as changes in the sale price, the product Calidda marketing and displays affect total revenues (Ferrara 2010).

To forecast revenues and total costs include an analysis of how combinations of factors affecting revenue and costs. For now we assume that plant production units are the only factor costs and revenues.

CVU direct relationships are important because:

Such relationships have been helpful in making decisions.

Direct relationships help understand more complex relationships.

The term CVU analyzes the behavior of total costs, total revenue and operating income as changes occur at the product level, selling price, variable costs or fixed costs. This analysis uses a single factor income and a single cost factor.

The letter "V ¨ by volume refers to factors related to production including: manufactured units or units sold, so in the model, changes to income and costs only arise from changes in the level of production.

Question 2:

Is the point where total revenue received is equal to the costs associated with selling a product (TR = TC). An equilibrium point is commonly used in businesses or organizations to determine the potential profitability of selling a certain product. To calculate the breakeven point is necessary to have clearly identified the behavior of costs, otherwise it is extremely difficult to determine the location of this point .

Sean IT total revenues, CT total costs, unit price P, Q the number of units produced and sold, CF fixed costs and variable costs CV. Then:.

If the product can be sold in greater quantities to those from the balance point so that the company will receive benefits. If, however, is below the equilibrium point will have losses.

Ways to represent the equilibrium point

Advantages and limitations in the analysis of equilibrium in graphics

Advantages

The graphics are easy to construct and interpret.

You may easily perceive the number of products needed to sell not to generate losses.

Provides guidelines regarding the amount of balance, safety margins and levels of profit / loss at different levels of production.

You can draw a parallel through ...