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Explain how break-even analysis and contribution margin help managers make decisions about how much of a product to produce.

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1- In this discussion, we will explore cost terminology. We will discuss which costs are direct, indirect, fixed, and variable.  It is also important to think in terms of allocating costs to cost objects. It is helpful to relate costs objects to events in your life so the meanings of these terms become clearer. Try relating these terms to things that you are familiar with such as the cost of taking a trip during spring break, the cost of going out on a date, the cost of a college education, and the cost of a single class. Propose at least one event and determine how you would allocate or trace the cost as well as which ones are fixed, variable, direct, and indirect.

Check your work and correct any spelling or grammatical errors. 

Use this space to provide specific guidelines for students to follow. Please see the sample below.

Reply to at least two classmates’ posts. Although there are no requirements to use a number of words, your response to your classmate’s discussion should be substantive and add value to the discussion (i.e. reflecting on their response, asking follow up-questions, etc.). 

2-  we gain a deeper understanding of cost-volume-profit analysis or CVP.  Discuss the rationale for using CVP in manufacturing, service, and not-for-profit companies. Explain how break-even analysis and contribution margin help managers make decisions about how much of a product to produce. As the vice president of a production department, discuss ways to manage production volumes and the performance measures you might implement to ensure managers of production do not over-produce or produce quantities that cannot be sold.


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