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Break-Even Point
Level of sales at which profit is zero
Point where total sales equals total expenses
Point where total contribution margin equals total fixed expenses
Sales Variable Expenses Fixed Expenses = $0
Once the break-even point is reached, operating income will increase by the unit
CM for each additional unit sold
Cost-Volume-Profit Relationships in Graphic Form
CostVolumeProfit (CVP) Graph
Profit Graph
AFM 102: Winter 2017
Incremental Analysis
Analytical approach that focuses only on those items of revenue, cost, and
volume that will change as a result of a decision
Break-Even Analysis
The Equation Method
Method of computing breakeven sales using the contribution format income
statement
The Formula Method
After-Tax Analysis
Indifference Analysis