Cost-volume-profit analysis

1. Explain how short-term operating decisions differ from other decisions made by managers.

2. How is activity defined in cost-volume-profit analysis?

3. Describe the five basic assumptions of cost-volume-profit analysis.

1. Explain the breakeven point in units. How is it related to the breakeven point in dollars?

2. Explain each of the following: contribution margin per unit and contribution margin ratio.

3. Explain how to calculate before-tax profit by using after-tax profit.

1. How can cost-volume-profit analysis determine the number of units that must be sold to achieve a certain profit after taxes?

2. Explain the difference between product and no product costs.

3. Explain the three types of product costs and give an example of each.

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