Performing Contribution Margin Analysis

Introduction The Contribution Margin is a significant financial metric that is sometimes neglected by managers. While profit margin is one we usually hold very important, it gives information only on the amount with which revenues exceed costs. On the other hand, Contribution Margin provides us with a way to see how exactly each separate product […]

The Absorption Costing Method

Today we take a look at the Absorption Costing Method and how it is used to allocate cost to produced goods. Do not forget to download the Excel working file at the end of the article. What is Absorption Costing? Absorption Costing is a management accounting method for accumulating all costs associated with production in […]

Cost-Volume-Profit Analysis and Break-even point

Today we will take a look at Cost-Volume-Profit (CVP) analysis and the Break-even point (BEP) in sales. Cost-Volume-Profit Analysis The Cost-Volume-Profit  (CVP) analysis is a method of cost accounting. It looks at the impact of changes in production costs and sales on operating profits. Performing the CVP, we calculate the Break-even point for various sales […]