Cost-volume-profit analysis looks to determine the break-even point. The breakeven point is when Revenue covers total expenses. There is no profit and no loss. Net income is $0.00.
CVP looks for different sales volumes and cost structures. It is used to determine the break-even point. How many units do I need to sell to breakeven?
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Video on cost-volume-profit with multiple products
Chris Menard's blog post on break-even.
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• Create a PivotTable in...
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In this video, we will determine the Contribution Margin and create a CVP chart it in Excel?
The contribution margin is a company's sales less its variable expenses. Then, divide the company's fixed costs by the contribution margin. This will give you the company's break-even point in total dollars of sales.
Chris Menard walks you through finding your contribution margin and break-even in units and creating a chart. Menard trains the Executive MBA students from the Terry College of Business at the University of Georgia. The CVP and break-even chart was a request from an MBA student during one of my training sessions in Atlanta, Georgia.
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