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According to the Bridgestone Behavioral Health Center: Cost - VolumeProfit ( CVP ) Analysis for Planning and Control Case Study 5 . Fixed costs can
According to the Bridgestone Behavioral Health Center: CostVolumeProfit CVP Analysis for Planning and Control Case Study
Fixed costs can be discretionary or committed. Using your judgment based on the discussion in the case, identify which costs are likely to be discretionary. Assuming that management is able to decrease discretionary fixed costs by what would be the impact on Bridgestones breakeven point revenues?
As Bridgestone operates during the next year, do some services deserve more attention than others? Hint: What is their relative contribution to the WACM and to the total contribution margin? Which services?
How can the budgetary weighted average contribution margin WACM percentage be used to help control the actual operations of Bridgestone?
If a budgetary weighted average contribution margin WACM percentage has been developed with an expected level of revenue and a planned fixed cost and the budgetary WACM percentage is in fact achieved in the next future time period, could the organization still face losses if the total revenue drops below the budgeted level or total fixed costs increase beyond the budgeted levels? Can you explain how losses still might occur even though the planned WACM percentage is being realized in the future time period?
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