Chapter 8: Decision making in the short term – cost-volume-profit analysis
Internal decision makers in a business will need to make decisions frequently about the products including setting a sales price, determining discounts and evaluating costs. In this chapter we will learn:
- Why costs matter
- To understand the cost equation
- The concept of the contribution margin
- Calculate the break even point for a business
- Perform sensitivity analysis for a business that sells a single product
- Perform sensitivity analysis for a business that sells multiple products
- To calculate the degree of operating leverage