Answered: Discuss (i). The notions and purposes…

Discuss (i). The notions and purposes of CVP Analysis, and (iii) The Components of CVP Analysis (Break-Even Analysis, Target Analysis, Margin of Safety Analysis, Sales-mix Analysis and others)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6Q: Explain how a manager can use CVP analysis to make decisions regarding changes in operations or...

See similar textbooks

Related questions

Q: What assumption is usually made concerning sales mix inCVP analysis?

A: Sales mix: A proportion of two or more products sold by the company to maximize the profit, that…

Q: The systematic examination of the relationships among selling prices, volume of sales and…

A: It is significant for every busines to analyse the quantity to be sold for achieving break even and…

Q: Identify any two potential drawbacks that purchasing manager could face given their choice of…

A: The sourcing process encompasses all activities centered on identifying and evaluating possible…

Q: Which of the statement is not a true reflection of Target cost gap ? The target cost gap =…

A: target costing is the way in which deriving of a target cost is done to set the production manager…

Q: The primary objective of a transfer pricing system/scheme/policy is to motivate segment managers to…

A: internal transfer can be between the division or between the related companies.

Q: Three major influences on pricing decisions are ________. A. continuous improvement, customer…

A: Price is the cost of product to the ultimate customers, hence it needs to be decided in such manner…

Q: Describe the difference between the unit-soid approach to the cvp analysis and to the sales revenue…

Q: Which of the following is not an underlying assumption of a conventional CVP analysis? Multiple…

A: Cost-volume-profit analysis is the most important tool that is used by managers to specify the cost…

Q: Which of the following choices correctly denotes factors that can influence a company's pricing…

A: Pricing a product or service is an important task for every organisation. It is the basis for the…

Q: Which of the following is NOT an element of the marketing mix? a. Distribution b. Pricing c. Target…

A: elements of marketing mix - Product Price Place Promotion

Q: CVP Analysis is an important decision-making tool for which reason? O a. Setting selling price O b.…

A: The cost volume and profit analysis is an important to which help the management to calculate and…

Q: describe the factors that drive sales and revenue: Income Advertising Preferences Pricing

A: Income : Income is the money received by a person or a company in exchange for labour, the…

Q: The strategy that the company could take to maintain the competitive advantages are Cost Leadership,…

A: Competitive advantage refers to factors that allow a company to produce goods or services better or…

Q: Cost calculation

A: Cost is the amount incurred in production of product, carrying out a process, conduct of sales or…

Q: Explain the Sales Comparison Approach?

A: Sales comparison approach is comparative market analysis that compares a property to other…

Q: A type of strategic pricing based on analytical methods is used to: Multiple Choice Utilize…

A: A pricing strategy is a method used to establish the best price for a product or service.

Q: Which of the following statements is untrue about distributor metrics? Group of answer choices Goals…

A: Answer: The untrue option is as follows, The lower the standard of service, the greater the cost is…

Q: Why might an analyst incorporate the industry-market-size factor and the interrelationships among…

A: Operating Income: The outcome of deduction of operating expenses and depreciation from the gross…

Q: What is meant by the term sales mix? What assumption is usually made concerning sales mix in CVP…

A: Sales mix of a product is the proportion of a product sales in overall sales of the company. A…

Q: The GAAP is an acronym that represents which of the following?Choose one answer.a. Principles for…

A: GAAP refers to as the Generally Accepted Accounting Principles.

Q: QUESTION 1 Match the type of company and its most likely pricing approach given the company sells…

A: Cost-Plus Pricing Strategy: Retailers frequently use this pricing approach to set prices. Cost-plus…

Q: What is the normal sequence in performing top down security analysis? A-competition, consumer…

A: INTRODUCTION The top-down approach is a very important approach which is used in the fundamental…

Q: Which of the following statement is CORRECT about the foundational assumption used in CVP analysis.…

A: CVP analysis means the cost-volume profit analysis. This analysis in cost management is done to have…

Q: How would your error affect breakeven sales and operating income under the proposed sales commission…

A: Affect of error on break-even sales and operating income:

Q: Explain sales cutoff tests.

A: Auditing: Auditing refers to an independent examination of financial information of any…

Q: Which of the following can be considered a risk in CVP analysis?

A: CVP Analysis: CVP analysis establishes the relation between cost, volume and profit of the…

Q: What factors affecting ROI does the DuPont method of protability analysis highlight?

A: Return on Investment (ROI): It is an accounting measure of income divided by an accounting measure…

Q: Explain the impact of the cost-volume-profit connection on pricing strategy.

A: The cost volume profit analysis analyse the impact of the variable cost and fixed cost on the…

Q: From the standpoint of cost control, why is the FIFO method superior to the weighted-averagemethod?…

A: FIFO method is First in First out method in which inventory which is purchased first will be sold…

Q: The following statements are true regarding the financial perspective EXCEPT: a. Financial…

A: Any key objective that is related to the company’s financial health and performance may be included…

Q: What is meant by customer-profitability analysis? Give an example of an activity that might be…

A: Customer Profitability Analysis: It is the process of ascertaining the amount of revenue earned…

Q: Efficient customer service could be achieved through avoiding stock outs by making accurate A.…

A: Stock Out: The simple meaning is: When there is a demand in market for the product but the company…

Q: Calculate the effect on profit of a proposed change in ‘Sales Mix’ from the following data and also…

A: Sales mix should be such that the total contribution can be maximised. Which can be done by giving…

Q: Using performance reports to evaluate cost, revenue, and profit centers Management by exception is a…

Q: what are the advantages of calculating a supplier performance index?

A: Supplier Performance Index: A supplier performance index is used to determine the total cost of…

Q: Discuss it in your own understanding and then give example each of the following: Tangible and…

A: 1.Tangible and Intangible Tangible is something which a person can see, feel or touch and thus…

Q: Based on the facts of Easy Problems Corp. The margin of safety ratio (MSR) and the break-even sales…

A: Solution Given Selling price per unit 25 Less Variable cost per unit (15)…

Q: Which of the following should be used to compute the sales mix so that the break-even computation is…

A: In the case of a multiproduct firm, it is essential to calculate the weighted average contribution…

Q: Explain the following assertion: “Price setting generally requires a balance between market forces…

A: Businesses have to make a lot of decisions in running a business one of which is price setting. They…

Question

Discuss (i). The notions and purposes of CVP Analysis, and (iii) The Components of CVP Analysis (Break-Even Analysis, Target Analysis, Margin of Safety Analysis, Sales-mix Analysis and others)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Answer

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Which of the following is not an objective used in the balanced scorecard approach? Customer Financial Vendor Learning and growth
Explain how a manager can use CVP analysis to make decisions regarding changes in operations or pricing structure.
Consider the following quality improvement strategy as expressed by a series of if-then statements: If real-time feedback information capabilities improve, then post-sales service time will improve. If post-sales service time improves, then post-sales service quality will increase. If post-sales service quality increases, then customer satisfaction will increase. If customer satisfaction increases, then market share will increase. If market share increases, then sales will increase. If sales increase, then profits will increase. Required: 1. Prepare a strategy map that shows the cause-and-effect relationships of the quality improvement strategy (see Exhibit 13.10 for an illustrative example). 2. Explain how the quality improvement strategy can be tested.
Which of the following can be considered a risk in CVP analysis? a. Sales mix b. Break-even point c. Margin of safety d. Contribution margin
What assumption is usually made concerning sales mix inCVP analysis?
What is the normal sequence in performing top down security analysis? A-competition, consumer demand, threat of substitute products B-market conditions, risk, company fundamentals C-economy, industry, company D- proftability, efficiency, liquidy
Explain sales cutoff tests.
Describe Estimating Supplier Costs Using Reverse Price Analysis?
Which of the following should be used to compute the sales mix so that the break-even computation is meaningful to management in a multiproduct firm? A. The most desirable mix. B. The least desirable mix. C. The expected mix. D. The most profitable mix.
Enumerate and explain briefly the limitations of using CVP analysis in pricing decisions.
Classify the performance measures below into the most likely balanced scorecard perspective towhich it relates: customer (C), internal processes (P), innovation and growth (I), or financial (F). Defective products made
Explain in details what is SWOT analysis. Do SWOT (Strength, Weaknesses, Opportunities, Threats) Analysis for the product that you are going to sell