Week 4 Reflection - ACC 561
Week 4 Reflection
The learning activities for week four were complex and detailed. Cost-volume-profit (CVP) analysis contains information that must be accurate in every aspect to gain the benefits of the analysis itself. Misinterpreted data can result in over and under spending, loss of revenue, and possible business failure. CVP analysis can be a critical tool for a new business venture for any entrepreneur. New business has no preexisting data to measure quantities, inventories, overhead, or accurate projections. In this case, a new business can use A CVP analysis based upon the market within similar business. The analysis can be scaled up or down based upon projected sales, market prices, cost, volume, and cash. Overhead is major component with every business startup and preexisting. It is particularly important with a startup company to minimize expenses and maximize revenue. Because startups are typically limited in purchasing power and cash, overhead is a critical component to evaluate accurately.
The study of cost behavior analysis and the reading in chapter 18 was an interesting subject to explore this week. Although it may seem obvious costs are impacted by activity, and a new business owner must identify those activities that impact bottom line. Variable, fixed costs, and mixed costs must be considered separately. For example, a new business owner of an online book store will recognize fixed costs such as rent. However, the owner will also experience variable costs such as costs for books based on sales. In addition, it is possible there are mixed costs, so the owner may experience discounts when they purchase specific quantities from certain suppliers, so a new business owner must understand the impact of all costs and how the changes effect profit. Volume of activity, selling price, variable and fixed costs along with sales impact the cost-volume-profit analysis. This information helps internal management to make decisions, recognize
The learning activities for week four were complex and detailed. Cost-volume-profit (CVP) analysis contains information that must be accurate in every aspect to gain the benefits of the analysis itself. Misinterpreted data can result in over and under spending, loss of revenue, and possible business failure. CVP analysis can be a critical tool for a new business venture for any entrepreneur. New business has no preexisting data to measure quantities, inventories, overhead, or accurate projections. In this case, a new business can use A CVP analysis based upon the market within similar business. The analysis can be scaled up or down based upon projected sales, market prices, cost, volume, and cash. Overhead is major component with every business startup and preexisting. It is particularly important with a startup company to minimize expenses and maximize revenue. Because startups are typically limited in purchasing power and cash, overhead is a critical component to evaluate accurately.
The study of cost behavior analysis and the reading in chapter 18 was an interesting subject to explore this week. Although it may seem obvious costs are impacted by activity, and a new business owner must identify those activities that impact bottom line. Variable, fixed costs, and mixed costs must be considered separately. For example, a new business owner of an online book store will recognize fixed costs such as rent. However, the owner will also experience variable costs such as costs for books based on sales. In addition, it is possible there are mixed costs, so the owner may experience discounts when they purchase specific quantities from certain suppliers, so a new business owner must understand the impact of all costs and how the changes effect profit. Volume of activity, selling price, variable and fixed costs along with sales impact the cost-volume-profit analysis. This information helps internal management to make decisions, recognize