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Cost-Volume-Profit assumptions
The main assumptions required in C-V-P analysis are:
1) The relationship holds merely within the appropriate range. The relevant range is a band of activity in which a specified cost behavior is stated.2) The behavior of net cost and net revenue has consistently been determined and is lineal in the relevant range.3) All costs can be splitted into fixed and variable such that mixed costs are decomposed into their fixed and their variable components.4) Selling prices are constant hence we avoid quantity discounts.5) Efficiency and production stay similar therefore we ignore the learning curve effect.6) The prices of factors of production stay constant.7) There are no limiting factors
The Knapp Company needs to predict the labor cost in producing small carrot patch dolls. The following production information is available: Year Dolls Pr
Graphic Analysis Whenever you have two data points, you should generally suppose a linear relationship. When you acquire more data, you can study the data to determine when there
M/s ABC is seeing relaxing its collection efforts. At current its sales are as Rs.40 lakhs, the ACP is here 20 days and variable cost to sales ratio is .8 and bad debts are as .05
The decisions about long-term investment are depends on judgments on future cash flows, the improbability of such cash flows and the opportunity cost also of the funds to be invest
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C-V-P ANALYSIS UNDER UNCERTAINTY A major limitation of the basic C.V.P analysis is the assumption that the unit variable cost, selling price and the fixed costs are constant an
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Explain the Shut down cost A cost which will be still be required to be incurred even though a plant is closed or shut down for a temporary period. Ffor example the cost of
calculate formula
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