Assume you sold 10,000 chrysanthemums at 25 pesos apiece in November of last year. A 10% commission will be paid to you for each artwork sold. How much did you sell? Marie hoped to sell 10,000 chrysanthemums last November, but she only sold 15,000 chrysanthemums. Her chrysanthemums are 20 pesos each. Her total costs were 150,000, thus the cost per unit is 15.00. Maria, one of your dealers, was able to sell 5,000 of the 15,000 units sold. What was the proportion of total sales at Maria's location? 25,000 250,000 225,000 10,000 30% 33.33% 3%
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
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