Accounting terms: Variable cost are Costs that show a discrepancy with sales, e.g. sales commission. For fixed cost, total cost does not vary with variations in the size of activity (within a relevant range). Mixed Costs (also known as semi-variable) are one that comprises both fixed and variable cost elements.
Cost Volume Profit (CVP) analysis is an administrative accounting practice that is involved with the outcome of trades’ volume and product expenses on effective yield of a firm.
It is concerned with how operating yield is influenced by alterations in fixed costs, variable costs, selling rate for each unit and the trade mixture of two or more diverse products (Bierman, 2010). CVP scrutiny has the resulting assumptions:
the period (Barry, 1979). The capital expenditures budget pinpoints the amount of cash an organization will invest in long‐term assets and projects. A cash budget is a valuation of the cash inputs and yields of an enterprise or person or over a specified time.
Production budget is a schedule displaying calculate production in units which ought to be made by a manufacturer all through a specific period so as to meet the anticipated demand for sales and the prepared finished goods list.
A manufacturing overhead budget encompasses all the costs, except labor and raw materials that will be acquire by a manufacturing company during a fiscal year.
Barry, C. B., Velez-Arocho, J. I., & Welch, P. R. (1979). A Bayesian approach to CVP analysis under parameter uncertainty. Austin: University of Texas at Austin, Graduate School of Business.
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