acc_557_week_1_individual_assignme...

Jun 2nd, 2015
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acc_557_week_1_individual_assignme...

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.Learning Team A Week 4 SummaryACC/561DateInstructorWeekly SummaryA tool of cost-volume profit relationships helps managers and owners determine what is financially sound for their company. It helps enable short-term and long-term decision-making. Break-even analysis a tool included in cost-volume profit analysis signifies the units or dollar amount of sales whereas sales equal the expenses also known as total costs to the company. "Cost-volume-profit (CVP) analysis is a mathematical representation of the economics of producing a product (Kee, 2007, p.1). It is critical in planning profits. Managers can use the information gleaned from this analysis, usually in a CVP Income Statement, to view how changes in costs affect profit, which can be used o set strategies and project critical milestones. However, an interesting aspect highlighted by Robert Kee is that the usual CVP analysis does not take the cost of capital into account. The cost of capital "is the rate of return that a firm would receive if it investedin a different vehicle withsimilar risk"(investopedia, n.d.) To put it another way, what is the cost of not investing the money in another way?

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