Answer
1. Equation Method: Expressing CVP relationships through mathematical equations, such as the break-even point formula, which helps calculate sales volume needed to cover costs.
2. Graphical Method: Using charts and graphs to visualize CVP relationships, like a break-even chart that illustrates the intersection of revenue and cost lines.
3. Contribution Margin Ratio: Calculating the contribution margin as a percentage of sales, which provides insights into how changes in sales impact profits and break-even points.
Work Step by Step
1. Equation Method: Expressing CVP relationships through mathematical equations, such as the break-even point formula, which helps calculate sales volume needed to cover costs.
2. Graphical Method: Using charts and graphs to visualize CVP relationships, like a break-even chart that illustrates the intersection of revenue and cost lines.
3. Contribution Margin Ratio: Calculating the contribution margin as a percentage of sales, which provides insights into how changes in sales impact profits and break-even points.
