Cost Volume Profit and Contribution Margin Analysis

Activity: Cost-Volume-Profit and Contribution Margin Analysis

By completing this assignment, you will learn how to use cost-volume-profit (CVP) analysis to make business investment and planning decisions. Managers use CVP analysis to assist them with making decisions about whether to expand a business’ output by acquiring additional productive capacity, introduce new (or discontinue existing) products or services, and to establish the prices of products or services sold by a business. Managers also use CVP analysis to assist them with a business’ annual production planning.

By completing this assignment, you will learn how to prepare operating statements using the contribution margin method and the full-absorption method, and use those statements to explain the difference in gross profit resulting from these alternative methods of presenting operating results. Managers often prefer to use the contribution margin method to facilitate their planning and control of a business’ operations.

Please use the file entitled Topic1Template for this assignment. It is located in the Content section of the course, under Course Resources, Assignment Templates. Once you have downloaded the file, complete all the necessary work, and rename the file with your Last and First name. For example, if your name is John Doe, then you would rename the file as Topic1DoeJohn. Once you have done this, you must upload the completed assignment to the appropriate course assignment location of this course.