Assignment: Cost, Volume, and Profit Formulas
Review the following illustrations found in Ch. 6 of your text: 6-12, 6-15, 6-17, 6-18, 6-19, & 6-20.
Write a 350- to 700-word paper that addresses the following:
Explain the components of cost-volume-profit analysis.
What does each of the components mean?
Based on the formulas you have reviewed, what happens to contribution margin per unit when unit selling prices increase? Illustrate your explanation with an example from a fictitious company of how an increase in unit selling prices might affect contribution margin.
When fixed costs decrease, what does this do for sales? Illustrate your explanation with an example from a fictitious company.
Define contribution ratios.
What happens to contribution ratios as one of the components changes?
Format your paper according to APA standards.