Accounting Unit 1 - AOS 1 SAC 2

Recommended Retail Price

A selling price that is recommended by the manufacturer or wholesaler

Competitors Price

Prices charged by businesses competing in the same market

Market Reaction

The response of customers in a particular marketplace to price levels for a particular good or service.

Quotes

A method determining a selling price by estimating costs involved with a particular job, and then adding on a certain amount of desired profit.

Percentage Mark-Up

Determining selling prices by adding to the cost price a predetermined profit margin.

Cost Volume Profit Analysis

An analysis that allows a business to determine a selling price or volume of sales that will let them achieve a specific profit goal.

Variable Costs

Costs that vary directly with the level of activity.

Fixed Costs

Costs that do not vary with the level of activity.

Break Even Point

The level of sales where total revenue equals total expenses and the business makes neither a profit nor a loss.

Cost Volume Profit Analysis Formula

Quantity = (Fixed Costs + Desired Profit) / Selling Price - Variable Costs

Selling Price using Mark Up

Selling Price = Cost Price x ( 1+mark up/100)

Cost Price using Mark Up

Cost Price = Selling Price / (1 + Mark up/100)

Calculate Mark Up Percentage

Step 1: Selling Price - Cost Price = x

Step 2: (x/cost price) x 100

Sales Revenue

Selling Price x Quantity

Total Variable Costs

Variable Cost x Quantity