BUS 535 Managerial Accounting ( westcliff university) Wk4 DQ1 Discussion Question 4 – CLO 1, CLO...

BUS 535 Managerial Accounting ( westcliff university)

Wk4 DQ1 Discussion Question 4 – CLO 1, CLO 2, CLO 5, CLO 7, CLO 8 Please answer each of the following questions in detail. Provide in-text citations and include examples whenever applicable. Explain single product cost-volume-profit (CVP) and break-even analysis. Provide a hypothetical example of CVP and breakeven analysis. Provide in-text citations and explain your example in detail. Explain multiproduct break even analysis. What is the assumption on proportions among the quantities in multiproduct break even analysis? Provide a hypothetical example of multiproduct break even analysis. Provide in-text citations and explain your example in detail.

Expert Solution

Cost volume profit analysis and break even analysis are interchangeable words.
Break even analysis is a methode where profit planing is made with the variables mainly cost ,profit ,volume
Break even point sales is found by the formula BEP=F/C
Bep=fixed cost /contribution per unit

Eg :if a company have contribution margin 40% and fixed cost 300000 break even sales =30000/40%=750000
multiproduct break even analysis is more complex because the there is a selection of suitable &profitable sales mix
The sales mix which has maximum total contribution is selected

And the limiting factor also should be considered

Eg for multi product break even Product A (contribution=20)
ProductB(contribution=45
Total fc =10000
Sales mix are1) A-300 &B-600 2)A-450&B-450
Answer sales mix 1
A= 300×20=6000
B=600×45=2700
total =33000-10000(fc)
=23000
Sales mix 2
A-450×20=9000
B-450×46=20250
Profit =29250-10000=19250
Sales mix a is profitable which has more contribution &profit

ekkarill92 answered 2 years ago

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