6. Mixed costs are costs that a. Mixed costs change but not proportionately with changes in the a. For purposes of CVP analysis, mixed costs must be classified into their fixed and variable elements. One method that management may use to classify these costs is the b. The high-low method uses the total costs incurred at the and levels of activity. The difference in costs between the high and low levels represents costs, which can change as c. Fixed costs are determined by or B. Cost-Volume-Profit Analysis. on Cost-volume-profit (CVP) analysis studies the impact of and CVP analysis is important in management decisions pertaining to 1. 2. 3. 4 2. The following assumptions underlie each CVP analysis: a. b. C. d. e. 3. Contribution margin is It can be expressed as a. Unit Contribution Margin b. Contribution Margin Ratio = C. Break-even Analysis. 1. The break-even point is the level at which the company will realize 2. Why is knowledge of the break-even point is useful to management? when 3. The break-even point can be: Computed from a mathematical equation: a. b. Using the contribution margin technique: Break-even Point in Units Or in Dollars c. A graph can also be used as an effective way to determine and illustrate the break-even point, at the intersection of D. Target net income 1. Target net income is a. Target net income equation is Contribution margin technique: 1. Required Sales in Dollars = 2. Required Sales in Units = 3. In a graphic presentation: In the profit area of the CVP graph, the distance between the sales line and the total cost line at any point equals E. Margin of safety. Margin of safety is the difference between at the The margin of safety can be expressed in a. Margin of Safety in Dollars b. Margin of Safety Ratio