Variable costs/CVPA Calculations

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10 Terms

1
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What are variable costs?

  • business expense that fluctuates depending on level of output/sales

2
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What are variable sales associated with?

  • Production/sales levels

  • Change regularly based on business production

3
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What represents variable costs in the calculations?

  • Represented by V

  • (P-V) = contribution margin

4
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What are examples of variable costs?

  • Raw materials/parts used in production

  • Sales commissions

  • Electricity/utilities

5
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What does P represent in CVPA Calculations?

  • Selling price per unit

6
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What does V represent in CVPA Calculations?

  • Variable cost per unit

7
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What does Q represent in CVPA Calculations?

  • Quantity of products sold

8
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What does F represent in CVPA Calculations?

  • Total fixed costs

9
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What does P-V represent in CVPA Calculations?

  • Contribution margin

10
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What is the Profit calculation?

  • Profit = (P-V) x Q - F