Cost-Volume-Profit Analysis: Key Concepts and Calculations
Cost-Volume-Profit Analysis
Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect operating income and net income.
Assumptions of CVP Analysis
- Sales price per unit is constant.
- Variable costs per unit are constant.
- Total fixed costs are constant.
- Everything produced is sold.
- Costs are only affected because activity changes.
- If a company sells more than one product, they are sold in the same mix.
- CVP analysis requires costs (manufacturing, selling, and admin) be identified
Quantitative Research: Interval Scales and Questionnaires
Understanding Interval Scales
The interval scale is a type of metric scale that focuses on quantitative values. An interval scale can always be divided into equal portions. This means the difference between any two values is equivalent to the difference between any two adjacent values of an interval scale.
The most common example is a Celsius temperature scale in which the difference between the values is the same. The difference in temperature between 10 and 20 degrees is the same distance as between
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Inventory Management Models
Model 1: Single Period Model (Normal Distribution)
- Purchase price (P): Given as a constant, let’s use p. Selling price (S): Given as a constant, let’s use s. Salvage value (V): Given as a constant, let’s use v. Demand (D): Given as a constant, let’s use d. Standard Deviation of Demand (σ): Given as a constant, let’s use σ. Overage Cost (Co): Co = p – v Underage Cost (Cu): Cu = s – p Critical Ratio (CR): CR = Cu / (Cu + Co) which expands to CR = (s-p) / ((s-p) + (p-v))
Managerial Accounting: Key Concepts and Applications
Managerial Accounting
Identifying Features of Managerial Accounting and Functions of Management
The primary users of managerial accounting reports, issued as frequently as needed, are internal users, who are officers, department heads, managers, and supervisors in the company. The purpose of these reports is to provide special-purpose information for a particular user for a specific decision. The content of managerial accounting reports pertains to subunits of the business. It may be very detailed
Read MoreKey Statistical and Machine Learning Concepts in Data Science
Probability Distribution
Probability distribution gives the possibility of each outcome of a random experiment or event. It provides the probabilities of different possible occurrences. Probability distribution yields the possible outcomes for any random event. It is also defined based on the underlying sample space as a set of possible outcomes of any random experiment. These settings could be a set of real numbers, a set of vectors, or a set of any entities. It is a part of probability and statistics.
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Five Number Summary and Outliers
The five-number summary includes the minimum, first quartile (Q1), second quartile (Q2), third quartile (Q3), and maximum. Outliers are values above Q3 + 1.5xIQR or below Q1 – 1.5xIQR.
Shifting and Scaling Data
Shifting data by adding a constant C:
- Mean and median increase by C.
- Spread remains unchanged.
Scaling data by multiplying by a constant C:
- Mean, median, and standard deviation (SD) are multiplied by C.
- Variance is multiplied by C2.
The 68-95-99.7 Rule
This rule states
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