SMC Cost Volume Profit & Sala

Journal 21

You will have 2 options with this chapter’s online journal. Refer to the back of chapter 21 for these Beyond the Number (BTN) cases.

Option #1: BTN 21-4. Complete the required exercises. –

Several important assumptions underlie CVP analysis. Assumptions often help simplify and focus our analysis of sales and costs. A common application of CVP analysis is as a tool to forecast sales, costs, and income.


Assume that you are actively searching for a job. Prepare a half-page report identifying (1) three assumptions relating to your expected revenue (salary) and (2) three assumptions relating to your expected costs for the first year of your new job. Be prepared to discuss your assumptions in class.

Option #2: BTN 21-6. Complete the required exercise. Each list of questions must contain at least 5 questions.

-A local movie theater owner explains to you that ticket sales on weekends and evenings are strong, but attendance during the weekdays, Monday through Thursday, is poor. The owner proposes to offer a contract to the local grade school to show educational materials at the theater for a set charge per student during school hours. The owner asks your help to prepare a CVP analysis listing the cost and sales projections for the proposal. The owner must propose to the school’s administration a charge per child. At a minimum, the charge per child needs to be sufficient for the theater to break even.


Your team is to prepare two separate lists of questions that enable you to complete a reliable CVP analysis of this situation. One list is to be answered by the school’s administration, the other by the owner of the movie theater.

You ONLY need to complete ONE of the two options to receive full credit.

Journal 22

For this chapter’s online journal, read the Ethics Challenge noted on page 988 of your textbook.

Ethics Challenge

BTN 22-3 Both the budget process and budgets themselves can impact management actions, both positively and negatively. For instance, a common practice among not-for-profit organizations and government agencies is for management to spend any amounts remaining in a budget at the end of the budget period, a practice often called “use it or lose it.’’ The view is that if a department manager does not spend the budgeted amount, top management will reduce next year’s budget by the amount not spent. To avoid losing budget dollars, department managers often spend all budgeted amounts regardless of the value added to products or services. All of us pay for the costs associated with this budget system.


Write a half-page report to a local not-for-profit organization or government agency offering a solution to the “use it or lose it” budgeting problem

1. Write a 1/2 page report to a local not-for-profit organization or government agency offering a solution to the “use it or lose it” budgeting problem.

2. Will your solution be different if this was a personal budget? Explain your response.

3. Do you prepare a personal budget?

To receive full credit, you need to answer ALL 3 questions. You must post first before you can see another student’s response.

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