Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed



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Solutions to review questions
8.1
The general case is costs and revenues – cost and revenue drivers – profit analysis. The general case has many revenue and many cost drivers. CVP is a special case, where there is a single revenue driver (output units) and a single cost driver (output units.
8.2
Operating profit is total revenues from operations for the accounting period minus total costs from operations (excluding income taxes Operating profit = Total revenues − Total costs


Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 Net profit is operating profit plus non-operating revenues (such as interest revenue) minus non-operating costs (such as interest cost) minus income taxes. Chapter 8 assumes non-operating revenues and non-operating costs are zero. Thus, Chapter 8 calculates net profit as Net profit = Operating profit − Income taxes

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