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    I (P Q) - (V Q) - F: The Fundamental Equation

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    ssregens82
    This document provides accounting formulas and definitions for revenue-cost-volume-income analysis, including: - Definitions for revenue (R), variable cost (V), fixed cost (F), total cost (C), contribution margin (CM), and contribution margin ratio (CMR) - Basic relationships between these terms, such as R=p*Q, C=V+F, CM=R-V, CMR=CM/R - Profit relationships including the definition of income (I) as R-C and the fundamental equation for income as I=(p*Q)-(v*Q)-F - Formulas for target income quantity (TIQ), target income revenue (TIR), bre

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    I (P Q) - (V Q) - F: The Fundamental Equation

    Uploaded by

    ssregens82
    152 views1 page
    This document provides accounting formulas and definitions for revenue-cost-volume-income analysis, including: - Definitions for revenue (R), variable cost (V), fixed cost (F), total cost (C), contribution margin (CM), and contribution margin ratio (CMR) - Basic relationships between these terms, such as R=p*Q, C=V+F, CM=R-V, CMR=CM/R - Profit relationships including the definition of income (I) as R-C and the fundamental equation for income as I=(p*Q)-(v*Q)-F - Formulas for target income quantity (TIQ), target income revenue (TIR), bre

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    cost accounting

    Original Title

    RCVINOTE

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    This document provides accounting formulas and definitions for revenue-cost-volume-income analysis, including: - Definitions for revenue (R), variable cost (V), fixed cost (F), total cost (C), contribution margin (CM), and contribution margin ratio (CMR) - Basic relationships between these terms, such as R=p*Q, C=V+F, CM=R-V, CMR=CM/R - Profit relationships including the definition of income (I) as R-C and the fundamental equation for income as I=(p*Q)-(v*Q)-F - Formulas for target income quantity (TIQ), target income revenue (TIR), bre

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    152 views1 page

    I (P Q) - (V Q) - F: The Fundamental Equation

    Uploaded by

    ssregens82
    This document provides accounting formulas and definitions for revenue-cost-volume-income analysis, including: - Definitions for revenue (R), variable cost (V), fixed cost (F), total cost (C), contribution margin (CM), and contribution margin ratio (CMR) - Basic relationships between these terms, such as R=p*Q, C=V+F, CM=R-V, CMR=CM/R - Profit relationships including the definition of income (I) as R-C and the fundamental equation for income as I=(p*Q)-(v*Q)-F - Formulas for target income quantity (TIQ), target income revenue (TIR), bre

    Copyright:

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    Download as XLS, PDF, TXT or read online from Scribd
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    Accounting 525 NOTATION:

    Revenue-Cost-Volume-Income

    revenue/price variable cost fixed cost total cost contribution margin contribution margin ratio quantity income TIQ TIR BEQ BER target income quantity target income revenue breakeven quantity breakeven revenue

    Total R V F C CM CMR Q I TIQ for I = TI TIR for I = TI TIQ for I = TI = 0 TIR for I = TI = 0

    Per Unit p v f c cm

    cmr
    1

    Note: because BQ = 0 amd SQ = PQ, no asset [EQ] is created so there is no need to distinguish between product and non-product costs. V and F represent all costs. Q is PQ or SQ which are equal. BASIC RELATIONSHIPS: R=p*Q V=v*Q f=F/Q C=V+F CM = R - V CMR = CM / R PROFIT RELATIONSHIPS: Definition: I = R - C I=R-V-F

    c=v+f cm = p - v cmr = cm / p

    C=Q*c CM = Q * cm CMR = cmr

    the fundamental equation

    I=[p*Q]-[v*Q]-F
    Algebra: I=[(p - v)*Q]-F I = [ cm * Q ] - F I + F = [ cm * Q ] [ I + F ] / cm = Q [ p * [ I + F ] ] / cm = p * Q [ [ p / p ] * [ I + F ] ] / [ cm / p ] = p * Q [ I + F ] / [ cm / p ] = R [ I + F ] / cmr = R TIQ = [ TI + F ] / cm TIR = [ TI + F ] / cmr BEQ = F / cm BER = F / cmr
    1/9/2014

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