Accounting Questions, accounting homework help

1. What are the components of cost–volume–profit (CVP) analysis? How does a CVP income statement help management make decisions?

2. Imagine Widgets Airlines, Inc. operates 18-seat commercial flights between New York City and Washington, DC. After 10 seats have been sold on each aircraft, the company has reached the break-even point. Should Widgets consider offering a discounted fare for seats 11 through 18? What are the advantages and disadvantages of not offering a discount on seats 11 through 18? What are the advantages and disadvantages of offering a discount on seats 11 through 18? How would you decide how much of a discount, if any, could be offered? What effect would the discount have on the financial statements of Widgets Airlines, Inc.?

3. What are the components of cost-volume-profit (CVP) analysis?

4. How does a CVP income statement help management make decisions?

5. How does a company’s operating leverage effect its profitability?

6. In what type of business decisions can incremental analysis be used?

7. Why is it important for a manager to understand break-even or cost-volume-profit analysis?

8. What is incremental analysis?

9. In what types of situations is incremental analysis most useful?

Reference:

Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2016). Accounting: Tools for Business Decision Making (6th ed.). Hoboken, NJ: John Wiley & Sons.