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1、 Learning ObjectivesAfter studying this chapter, you should be able to:1 Distinguish between variable and fixed costs.2 Explain the significance of the relevant range.3 Explain the concept of mixed costs.4 List the five components of cost-volume-profit analysis.5 Indicate what contribution margin is
2、 and how it can be expressed.6 Identify the three ways to determine the break-even point.7 Give the formulas for determining sales required to earn target net income.8 Define margin of safety, and give the formulas for computing it. The Navigator The NavigatorChapter 19Cost-Volume-ProfitDont Worry J
3、ust Get BigIt wasnt that Jeff Bezos didnt have a good job. He was a vice president at a Wall Street firm. But, he quit his job, moved to Seattle, and started an online retailer, which he named A. Like any good entrepre-neur, Jeff strove to keep his initial investment small. Operations were run out o
4、f his garage. And, to avoid the need for a warehouse, he took orders for books and had them shipped from other distributors warehouses. One board member recalls how excited the board was whenever an order came in from a customer in a state that Amazon had never serviced before.By its fourth month, A
5、mazon was selling 100 books a day. In its first full year, it had $15.7 million in sales. The next year, sales increased eightfold. Two years later, sales were $1.6 billion.Although its sales growth was impressive, Amazons ability to lose money was equally amazing. One analyst nicknamed it Amazon.bo
6、mb, while another, predicting its demise, called it Amazon.toast. Why was it losing money? The company used every available dollar to reinvest in itself. It built massive warehouses and bought increasingly sophisticated (and expensive) computer systems to improve its distribution system. This desire
7、 to grow as fast as possible was 950Scan Learning ObjectivesRead Feature StoryScan PreviewRead Text and answer p. 956 p. 959 p. 967 p. 970Work Comprehensive p. 970Review Summary of Learning ObjectivesAnswer Self-Test QuestionsComplete AssignmentsGo to WileyPLUS for practice and tutorialsDO IT! DO IT
8、! Feature Storyc19CostVolumeProfit.indd Page 950 9/26/11 9:49 AM user-F409c19CostVolumeProfit.indd Page 950 9/26/11 9:49 AM user-F409/Users/user-F409/Desktop/Users/user-F409/Desktopcaptured in a T-shirt slogan at its company picnic, which read “Eat another hot dog, get big fast.” This buying binge w
9、as increasing the companys fixed costs at a rate that exceeded its sales growth. Skeptics were predicting that Amazon would soon run out of cash. It didnt.In the fourth quarter of 2010 (only 15 years after its world headquarters were located in a garage), Amazon reported quarterly revenues of $12.95
10、 billion and quarterly income of $416 million. But, even as it announced record profits, its share price fell by 9%. Why? Because although the company was predicting that its sales revenue in the next quarter would increase by at least 28%, it predicted that its operating profit would fall by at lea
11、st 2% and perhaps by as much as 34%. The company made no apologies. It explained that it was in the process of expanding from 39 distribution centers to 52. As Amazons finance chief noted, “Youre not as produc-tive on those assets for some time. Im very pleased with the investments were making and w
12、eve shown over our history that weve been able to make great returns on the capital we invest in.” In other words, eat another hot dog.Watch the Southwest Airlines video in WileyPLUS to learn more about cost-volume-profit analysis in the real world.Source: Christine Frey and John Cook, “How A Surviv
13、ed, Thrived and Turned a Profit,” Seattle Post (January 28, 2008); and Stu Woo, “Sticker Shock Over Amazon Growth,” Wall Street Journal Online (January 28, 2011). The NavigatorAs the Feature Story indicates, to manage any size business you must understand how costs respond to changes in sales volume
14、 and the effect of costs and revenues on profits. A prerequisite to understanding cost-volume-profit (CVP) relationships is knowledge of how costs behave. In this chapter, we first explain the considerations involved in cost behavior analysis. Then, we discuss and illustrate CVP analysis.The content
15、 and organization of Chapter 19 are as follows.Preview of Chapter 19 Variable costs Fixed costs Relevant range Mixed costs Identifying variable and fixed costsCost Behavior Analysis Basic components CVP income statement Break-even analysis Target net income Margin of safetyCost-Volume-Profit Analysi
16、s The Navigator951COST-VOLUME-PROFITc19CostVolumeProfit.indd Page 951 28/09/11 7:29 AM F-497c19CostVolumeProfit.indd Page 951 28/09/11 7:29 AM F-497208/MHBR201/ben29421_disk1of1/0073529421/ben29421_pagefiles208/MHBR201/ben29421_disk1of1/0073529421/ben29421_pagefiles95219 Cost-Volume-ProfitCost behavior analysis is the study of how specific costs respond to changes in the level of business act
