GROUP 2

COST-VOLUME-PROFIT ANALYSIS:
REPORTERS
1. Break-even point in units & dollar sales
Hope Glory Valledor
2. Units & dollar sales needed to achieve a target income
3. Graphs of cost-volume profit relationship Richele Avancena
4. Multiple product analysis John Sison
5. Cost-volume profit analysis & risk & uncertainty Sitti Halima

PROFIT PLANNING:
1. Nature & objectives of budgeting
2. Budgeting system Wilma Berdejo
3. Types of budgets
4. Sales, productions, purchases, labor & overhead budget Yellaine Gabotero
5. Cost budget
COST-VOLUME-PROFIT ANALYSIS:

1. Analyses impact of changes in sales, variable costs & fixed expenses on profit.

2.Tool for pinpointing problems, planning & decision-making.

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$
PROFI
Sales – Cost/Expenses = T
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3.Produced Break-Even Point as a benchmark.

Break-Even Point: Sales = Costs/Expenses Contribution Margin Income Statement

CASE: Whitlier Co. plans to sell 1,000 mowers at Units Per Unit Total Ratio

$400each in the coming year. The total variable cost Sales 1000 $400 $400,000 100%
per mower is $ 325 and the total fixed cost is $
Less: Variable costs 1000 325 325,000 81.25%
45,000.
Contribution Margin 1000 $75 $75,000 18.75%
Compute the following:
Less: Fixed Expenses 45,000
1.Break-even points in units
2.Break-even points in dollar sales Operating Income $30,000
3.No of units to achieve a target income of $ 37,500.
4.Dollar sales to achieve a target income of $37,500.

1. BEP in Units = TOTAL FIXED COST 2. BEP in Dollar Sales = TOTAL FIXED COST
Contribution Margin per unit Contribution Margin Ratio

$ 45,0000 / $75 per unit = 600 units $ 45,000 / 18.75% = $ 240,000

3. Units to Achieve 4. Dollar Sales to Achieve

a Target Income = Total Fixed Cost + Target Income a Target Income = Total Fixed Cost + Target Income
Contribution Margin per unit Contribution Margin Ratio

($ 37,500+$45,000) / $ 75 per unit = 1,100 units ($37,500+$45,000) / 18.75% = $ 440,000

 Proof:
Sales ( 600 x $400) $240,000
1. Break-even points in units: Variable Cost ( 600x$ 325) 195,000
$45,0000/ $75 per unit = 600 units Cont Margin 45,000
Fixed Exp 45,000
Op Income 0

Sales $240,000
2. Break-even point in Dollar sales: Variable Cost ($240,000 x81.25%) 195,000
$45,000/18.75% = $ 240,000 Cont Margin 45,000
Fixed Exp 45,000
Op Income 0

Sales (1,100 x $400) $440,000

3. No of units to achieve a target income: Variable Cost (1,100 x $325) 357,500
($ 37,500+45,000) / $ 75 per unit = 1,100 units Cont Margin 82,500
Fixed Exp 45,000
Op Income 37,500

4.Sales $ to achieve a target income: Sales $440,000

($37,500+45,000) / 18.75% = $ 440,000 Variable Cost ($440,000x81.25%) 357,500

Cont Margin 82,500
Fixed Exp 45,000
Op Income 37,500