Cost Behavior Analysis and Cost Volume Profit Analysis

Cost Behavior and the Contribution Margin 1 lecture 28:58 Cost behavior preview What is Cost Behavior? Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline. For example, if the usage of a production line is approaching its maximum capacity, the relevant cost behavior would be to expect a large cost increase (to pay for an equipment expansion) if the incremental demand level increases by a small additional amount. The general types of cost behavior fall into three categories. First is variable costs, which vary directly with changes in business activity. For example, there is a specific direct materials cost associated with each product sold. Second is fixed costs, which do not change in response to business activity levels. For example, the rent on a building will not change, even if the sales level of the tenant changes dramatically. Finally, there are mixed costs, which contain fixed and variable elements. For example, an Internet access fee includes a standard monthly access fee (which is fixed) and a broadband usage fee (which is variable). Understanding cost behavior is a critical aspect of cost-volume-profit analysis. Cost Behavior and the Contribution Margin 1 lecture 28:58 Cost behavior preview What is Cost Behavior? Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline. For example, if the usage of a production line is approaching its maximum capacity, the relevant cost behavior would be to expect a large cost increase (to pay for an equipment expansion) if the incremental demand level increases by a small additional amount. The general types of cost behavior fall into three categories. First is variable costs, which vary directly with changes in business activity. For example, there is a specific direct materials cost associated with each product sold. Second is fixed costs, which do not change in response to business activity levels. For example, the rent on a building will not change, even if the sales level of the tenant changes dramatically. Finally, there are mixed costs, which contain fixed and variable elements. For example, an Internet access fee includes a standard monthly access fee (which is fixed) and a broadband usage fee (which is variable). Understanding cost behavior is a critical aspect of cost-volume-profit analysis. Cost behavior preview What is Cost Behavior? Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline. For example, if the usage of a production line is approaching its maximum capacity, the relevant cost behavior would be to expect a large cost increase (to pay for an equipment expansion) if the incremental demand level increases by a small additional amount. The general types of cost behavior fall into three categories. First is variable costs, which vary directly with changes in business activity. For example, there is a specific direct materials cost associated with each product sold. Second is fixed costs, which do not change in response to business activity levels. For example, the rent on a building will not change, even if the sales level of the tenant changes dramatically. Finally, there are mixed costs, which contain fixed and variable elements. For example, an Internet access fee includes a standard monthly access fee (which is fixed) and a broadband usage fee (which is variable). Understanding cost behavior is a critical aspect of cost-volume-profit analysis. Cost behavior preview What is Cost Behavior? Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline. For example, if the usage of a production line is approaching its maximum capacity, the relevant cost behavior would be to expect a large cost increase (to pay for an equipment expansion) if the incremental demand level increases by a small additional amount. The general types of cost behavior fall into three categories. First is variable costs, which vary directly with changes in business activity. For example, there is a specific direct materials cost associated with each product sold. Second is fixed costs, which do not change in response to business activity levels. For example, the rent on a building will not change, even if the sales level of the tenant changes dramatically. Finally, there are mixed costs, which contain fixed and variable elements. For example, an Internet access fee includes a standard monthly access fee (which is fixed) and a broadband usage fee (which is variable). Understanding cost behavior is a critical aspect of cost-volume-profit analysis. Cost behavior preview What is Cost Behavior? Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline. For example, if the usage of a production line is approaching its maximum capacity, the relevant cost behavior would be to expect a large cost increase (to pay for an equipment expansion) if the incremental demand level increases by a small additional amount. The general types of cost behavior fall into three categories. First is variable costs, which vary directly with changes in business activity. For example, there is a specific direct materials cost associated with each product sold. Second is fixed costs, which do not change in response to business activity levels. For example, the rent on a building will not change, even if the sales level of the tenant changes dramatically. Finally, there are mixed costs, which contain fixed and variable elements. For example, an Internet access fee includes a standard monthly access fee (which is fixed) and a broadband usage fee (which is variable). Understanding cost behavior is a critical aspect of cost-volume-profit analysis. Cost behavior preview What is Cost Behavior? Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline. For example, if the usage of a production line is approaching its maximum capacity, the relevant cost behavior would be to expect a large cost increase (to pay for an equipment expansion) if the incremental demand level increases by a small additional amount. The general types of cost behavior fall into three categories. First is variable costs, which vary directly with changes in business activity. For example, there is a specific direct materials cost associated with each product sold. Second is fixed costs, which do not change in response to business activity levels. For example, the rent on a building will not change, even if the sales level of the tenant changes dramatically. Finally, there are mixed costs, which contain fixed and variable elements. For example, an Internet access fee includes a standard monthly access fee (which is fixed) and a broadband usage fee (which is variable). Understanding cost behavior is a critical aspect of cost-volume-profit analysis. What is Cost Behavior? Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline. For example, if the usage of a production line is approaching its maximum capacity, the relevant cost behavior would be to expect a large cost increase (to pay for an equipment expansion) if the incremental demand level increases by a small additional amount. The general types of cost behavior fall into three categories. First is variable costs, which vary directly with changes in business activity. For example, there is a specific direct materials cost associated with each product sold. Second is fixed costs, which do not change in response to business activity levels. For example, the rent on a building will not change, even if the sales level of the tenant changes dramatically. Finally, there are mixed costs, which contain fixed and variable elements. For example, an Internet access fee includes a standard monthly access fee (which is fixed) and a broadband usage fee (which is variable). Understanding cost behavior is a critical aspect of cost-volume-profit analysis. What is Cost Behavior? Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline. For example, if the usage of a production line is approaching its maximum capacity, the relevant cost behavior would be to expect a large cost increase (to pay for an equipment expansion) if the incremental demand level increases by a small additional amount. The general types of cost behavior fall into three categories. First is variable costs, which vary directly with changes in business activity. For example, there is a specific direct materials cost associated with each product sold. Second is fixed costs, which do not change in response to business activity levels. For example, the rent on a building will not change, even if the sales level of the tenant changes dramatically. Finally, there are mixed costs, which contain fixed and variable elements. For example, an Internet access fee includes a standard monthly access fee (which is fixed) and a broadband usage fee (which is variable). Understanding cost behavior is a critical aspect of cost-volume-profit analysis. Cost Volume Profit Analysis 1 lecture 12:09 Cost Volume Profit Analysis

• Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.

Cost Volume Profit Analysis 1 lecture 12:09 Cost Volume Profit Analysis

• Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.

Cost Volume Profit Analysis

• Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.

Cost Volume Profit Analysis

• Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.

Cost Volume Profit Analysis

• Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.

Cost Volume Profit Analysis

• Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.

• Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.

• Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.

Multi product CVP analysis 1 lecture 18:29 CVP and sales Mix In multi - product CVP analysis , the company's sales mix is viewed as a composite unit, a selection of discrete products associated together in proportion to the sales mix. ... We calculate the contribution margins of all of the component parts of the composite unit and then use the total to calculate the break-even point. Multi product CVP analysis. 1 lecture 18:29 CVP and sales Mix In multi - product CVP analysis , the company's sales mix is viewed as a composite unit, a selection of discrete products associated together in proportion to the sales mix. ... We calculate the contribution margins of all of the component parts of the composite unit and then use the total to calculate the break-even point. CVP and sales Mix In multi - product CVP analysis , the company's sales mix is viewed as a composite unit, a selection of discrete products associated together in proportion to the sales mix. ... We calculate the contribution margins of all of the component parts of the composite unit and then use the total to calculate the break-even point. CVP and sales Mix In multi - product CVP analysis , the company's sales mix is viewed as a composite unit, a selection of discrete products associated together in proportion to the sales mix. ... We calculate the contribution margins of all of the component parts of the composite unit and then use the total to calculate the break-even point. CVP and sales Mix In multi - product CVP analysis , the company's sales mix is viewed as a composite unit, a selection of discrete products associated together in proportion to the sales mix. ..