6.1.

Analyzing the relationship cost - quantities - profit

In management and business operations, is not the same as companies and
organizations
large-scale economic officials, managers of small and medium enterprises often
have decision
in conditions of lack of support professional nature of financial information systems
basically accounting major, intensive. Therefore, the simple analysis tools, easy
easy to use will effectively help managers of small and medium enterprises in the
orientation and decision making for the daily operations of their business.
Cost Analysis - quantities - profit (CVP) is a very useful tool to help
for managers will be more aware of the relationship between costs, quantities and
profits.
CVP analysis does not require administrators to have full detailed accounting
information, it sets
explanations centered on profits affected by five factors as how:
1. different selling prices.
2. Sales.
3. variable costs per unit.
4. total fixed costs.
5. The structure of the products are sold.
Because the CVP analysis helps managers understand that the margins are
Profit was affected by factors such as how this mainly it is an important tool
in many key business decisions. These decisions may include: Should
selling products and services, to sell at a price much, use strategy
What marketing and apply the cost structure.
CVP analysis based on behavioral changes of business expenses for
changes in the volume of activity (production and sales). Some expense items such
as
direct materials, direct labor transforms the production volume of products
or sales changes, however, have a number of expenditure items not change when
production volume of product sales or changes, such as depreciation expense

machinery and factory house, the money wages of labor management.

According circulars 53/2006 / TT-BTC of June 12, 2006 the applicable Guidelines
management accounting in the enterprise, the type of variable costs or its fixed
Industry is defined as follows:
Variable costs, also known as variable (or variable costs): As the cost of production,
Business changes proportional to the total, the proportion of the variation in the
volume of products,
including raw material costs, direct materials, direct labor costs and a number of
clauses
102
overall production costs, such as labor cost, cost of utilities, repairs and spare parts
machine, ... variable cost does not change when calculated for a unit of production,
work.
Fixed costs are costs called invariant (haydinh charge): As the cost of that total
the number does not change with the variation in the volume of products, work,
including expenses for
amortization, employee wages, managers, ... Cost invariants of a product unit,
work is related inversely related to volume, product, work.
In short, the variation in volume of operations will directly impact the total
volume of variable costs and profits of the business, while the fixed costs
no change and no direct affect business results of the period.
6.2. Determine the breakeven point in the business plan shall
Breakeven point is the point at which total revenues equal total costs, in other
words
is at the point of zero profit. In construction the business plan shall breakeven point
is
Minimum mold that business managers may be acceptable in considering whether
to proceed
operating or not. Breakeven is a simple tool but effective evaluation plan shall,
it does not require management to use accounting detail and complex calculations
to question
effective response to expectations of the business plan shall.
Breakeven point is determined based on the following equation:

Total revenue - Total variable costs - fixed costs Total = 0

Breakeven point can be determined according to the volume of product (volume of
breakeven)
or by value (revenue breakeven).
For example 6.1Cong Hoa Vien Company manufactures and sells product X with
general information as follows:
Price to sell 1 unit of X 30,000
Total variable costs / 1 SP VND19,500
Total fixed costs in the company's 147 million contract period
Ask how much the company must sell the new product in the breakeven period?
Applying the equation above breakeven, called Q is volume of products for sale to
Air
capital, we have equations as follows:
Qx30.000 - Qx19.500 - 147 000 000 = 0
Solve equations define Q = 14,000 products
Thus, if the company wants to breakeven Member States, they have to sell at least
14,000 are
product units during the period. If the business plan shall Member States have
predicted block
volume consumer products under 14,000 units holding company would make losses
(revenue during the period
not enough to offset expenses). If the forecast volume of products sold are greater
than 14,000 shares
position, the company will be profitable.
If the calculated value, Member States will have the company achieve breakeven
revenue level in
420 million VND (14,000 x 30,000 e SP)
In this graph roads total revenue and total cost of road junction at the block
SP volume or 420 million VND 14,000.
Besides breakeven methods to identify and make use of the equation in Equation
on. Management can quickly calculate breakeven through application concept
contribution rate, also known

the other is called the balance to make charges (according to circulars 53/2006 / TTBTC, this concept is called the
"Interest on variable costs").
Contribution rate is the difference between the sale price (sales) and variable costs.
Target contribution rate
can be determined on the basis of units of product or on the basis of contribution
rates. contribution rate
can also be measure by absolute value or a percentage (of the selling price).
Going back to the example of the company Members States, we can determine the
contribution rates are indicators
Product X is as follows:
Contribution rate on a product: 30000-19500 = 10.500d / SP
Contribution rates: 10,500 / 30,000 = 35%
Contribution rate is the share of revenue after subtracting the variable costs
therefore about the economic significance, its interest
The main contribution is partly to offset fixed costs and generate profits. If the break
even point
where profit is zero, then it can be inferred that the company will break even if
adequate contribution rates
to cover total fixed costs.
In the example of the company Members States, 1 unit contribution rate is 10.500d
product, if total
147.000.000d fixed costs, the company is to sell the total product to breakeven is:
Pagesize breakeven = 147,000,000 / 10,500 = 14,000 SP
Or can determine breakeven sales as follows:
DS breakeven = 147 million / 35% = 420 million dong
The concept of contribution rates will not only help business managers easily
determine the quantities
breakeven sales in a business plan shall, it also helps business managers