Usefulness Of Cost Volume Profit Analyisi As Amangerial Concept

2473 words - 10 pages

"USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP.




"USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP.

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Accounting managers are responsible to identify the goals and objects of their company and apply . The methods which help them to achieve the targets which increase the firm value and conducted to the organization plan (budget).


"USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP.

Organization managers are concern about their target income and avoiding losses so, implementation of CVP analysis will answer the below question: 1) What sales volume is required to avoid loss? What sales volume is required to earn a target income? 2) What is the most profitable combinations of our elements Factors (fixed cost , variable cost, selling price , volume , profit ). 3) How can managers measure the effect of changes in(FC, unit variable cost, price)(cost structure) on the profit ? 4) Which cost structure is the better (high) variable cost, and (low) fixed cost, or the opposite? 5) If the underlying assumptions changes how an outcome will change if the original predicted data are not achieved? 6) How can mangers incorporate taxes? 7) Which product should we emphasis on, if the company producing multiproduct?


"USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP.

The basic CVP models are subject to these limiting assumptions: 1) The selling price is constant throughout the relevant range. 2) All costs are classified as fixed or variable . 3) Unit variable cost is constant. 4) There is one constant sales mix . The only factor effecting (variable cost) is volume or level of activity.

The contribution margin :
Which is the deference between revenues and variable cost .It is the amount of money available to cover fixed cost and to generate profit. (CM) is the first used to cover the fixed cost and then what ever remains go towards profit .(CM)explained in the following equation : Sales Revenues- total variable cost =CM CM-fixed cost = OI


"USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP.

Contribution margin income statement :
It is a alternative format of income statement , organized the costs by behavior rather than by function the statement highlight the relationship of variable cost and fixes cost ,regardless of the functions. The contribution margin income statement is (internal tool) which is deferent from the traditional income statement (for internal reporting), Shows the classification of costs that is , manufacturing cost versus non- manufacturing expenses.


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