Cost-Volume-Profit (CVP) Analysis and Break-Even Analysis Step-by-Step, by Mike Werner

[@MikeWMiami]

Thank you for another great step by step accounting video!

[@accountingstepbystep2229]

You're most welcome! Thank you for watching and thank you for the comment!

[@MikeWMiami]

@@accountingstepbystep2229 Thanks!

[@jessicamoskowitz3357]

Informative and well done video! Very helpful to anyone looking to make these calculations. Follow for more high quality videos!

[@accountingstepbystep2229]

Dear Jessica, Thank you so much for the comment and kind words! Best regards, Mike

[@redietmuketbazezew7865]

Thank you so much for your help

[@accountingstepbystep2229]

Thank you for your comment and you're most welcome! I hope the video was helpful! Best regards, Mike

[@moonchild2242]

my man on hear saving my degree

[@accountingstepbystep2229]

I love your comment! Thank you so much for the kind words! I hope your degree is safe and on its way!

[@kayizasteven7536]

Thanks you Mr Mike for this wonderful video. My question is about how we can calculate contribution margin. Once it's not given. Then what is the difference between cost drive and cost activity. Thanks and be blessed.

[@accountingstepbystep2229]

Dear Kayiza. Thank you for your question! Generally, cost drivers are more apt to cause cost. That is, as the cost driver increases, it "drives" cost so cost also increases. On the other hand, an activity could be a cost driver and cause cost, or, it can be something that is correlated to the incurrence of cost instead of driving the cost. For example, the number of units produced would drive direct material cost, in that producing more units will cause direct material cost to increase because more material is need to produce the additional units. On the other hand total manufacturing overhead cost may increase as direct labor hours increases because there may be a correlation between direct labor hours and manufacturing overhead cost. It is logical that as direct labor hours increases, total manufacturing overhead will follow along increase as well. But, the direct labor hours does not cause most manufacturing overhead costs. For example, direct labor hours don't cause inspection cost, materials handling costs, or manufacturing electricity cost, but as more units are produced and direct labor hours increases, it is likely that the overhead cost mentioned above will follow along and also increase. I hope this information is helpful. Please let me know. Thank you again for your question and for viewing my videos. Best regards, Mike Werner

[@iqbolubaydullaev4601]

Thank you professor. It was helpfull.

[@accountingstepbystep2229]

I am sorry for this late reply and I apologizes for not seeing your comment earlier. Thank you so much for the very nice comment and encouragement! Thank you! I am so very happy the video was helpful. Thank you for your comment and for viewing my video. Very best regards, Mike.

[@chalafufa5100]

is there any unique treatment of fixed income like hall rent for meeting for calculating the total sales?

[@accountingstepbystep2229]

This is an interesting question. Generally, rent is viewed as a period cost, in other words, the rent is expensed as it is incurred. But, if you are renting space in a hall, for trade shows, for example, perhaps for the accounting you use to manage the business (your managerial accounting) you could group the all the cost of a particular show including the hall rent cost, as part of that particular show to determine the profitability of each show. Some trade shows may be more profitable than others and some may actually come in at a loss. With this in mind, you can perhaps focus on the costs of each show, especially the shows that are less profitable or unprofitable to see you changes can be made to improve profitability. Perhaps more sales volume is needed, perhaps some costs can be cut (by selecting a smaller booth size for example), or perhaps prices can be changed. For cost volume profit analysis, the hall rent for trade shows would probably be treated as a fixed cost because the rent does not change based on the amount of sales. But, an argument could be made that increased sales necessitates more trade shows, so you could at least try including it as a variable cost, but this could get tricky. Could get tricky because the sales volume of each show could be increases, but the trade show hall rent would stay the same in total, so it's actual cost behavior would be that of a fixed cost. If you re assessing individual trade shows, I would recommend treating the hall rent as fixed because the hall rent will not change as sales changes. Without more information, I am not certain my response is on target but I do hope it's somewhat helpful. Thank you for you comment and viewing my video and very best regards, Mike