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

 

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Accounting and Accountability Copyright © by Amanda White; Mitchell Franklin; Patty Graybeal; Dixon Cooper; and CDU Business School is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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