BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -The key CVP formula is as follows: profit = revenue – costs. Of course, to be able to apply this formula, you need to know how to work out your revenue: (retail price x number of units). Plus, you need to know how to work out your costs: fixed costs + (unit variable cost x number of units).

Detailed explanation-2: -Variable Cost Formula. To calculate variable costs, multiply what it costs to make one unit of your product by the total number of products you’ve created. This formula looks like this: Total Variable Costs = Cost Per Unit x Total Number of Units.

Detailed explanation-3: -This means we must analyze mixed costs to determine their fixed and variable components. There are three methods commonly used to analyze these costs: scatter diagrams, the high-low method, and regression analysis (least-squares regression).

Detailed explanation-4: -CVP analysis helps management in finding out the relationship between cost and revenue to generate profit. CVP Analysis helps them to BEP Formula. It is determined by dividing the total fixed costs of production by the contribution margin per unit of product manufactured.