In discussing BEP or CVP analysis, why is it necessary to assume that all units produced by the company are also sold? What difficulties would be caused in the BEP or CVP calculations if units were produced but not sold?
Answer to relevant QuestionsWhat is contribution margin, and why does it ﬂuctuate in direct proportion with sales volume? To what does a contribution margin ‘‘contribute’’? Explain the beneﬁts and drawbacks of using the margin of safety and degree of operating leverage to determine how well positioned an organization is in the market place. Use the information from Exercise 15. Wasabi Corp. is currently selling 30,000 units per year and has a 35% tax rate. Required: (a) What is Wasabi Corp.’s current annual income after taxes? (b) Management believes that ...Salida LLP provides two kinds of services to clients: telephone answering and billing. Because Salida’s clients for each type of service are approximately the same size, the company has standardized fees for its services: ...How are production and purchases budgets similar, and how do they differ? What type of organizations will use each of these budgets?
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