管理会计chapter6.ppt

ChapterSix Cost Volume ProfitRelationships LearningObjective1 Explainhowchangesinactivityaffectcontributionmarginandnetoperatingincome BasicsofCost Volume ProfitAnalysis ContributionMargin CM istheamountremainingfromsalesrevenueaftervariableexpenseshavebeendeducted BasicsofCost Volume ProfitAnalysis CMisusedfirsttocoverfixedexpenses AnyremainingCMcontributestonetoperatingincome TheContributionApproach Sales variableexpenses andcontributionmargincanalsobeexpressedonaperunitbasis IfRacingsellsanadditionalbicycle 200additionalCMwillbegeneratedtocoverfixedexpensesandprofit TheContributionApproach Eachmonth Racingmustgenerateatleast 80 000intotalCMtobreakeven TheContributionApproach IfRacingsells400unitsinamonth itwillbeoperatingatthebreak evenpoint TheContributionApproach IfRacingsellsonemorebike 401bikes netoperatingincomewillincreaseby 200 TheContributionApproach Wedonotneedtoprepareanincomestatementtoestimateprofitsataparticularsalesvolume Simplymultiplythenumberofunitssoldabovebreak evenbythecontributionmarginperunit IfRacingsells430bikes itsnetincomewillbe 6 000 LearningObjective2 Prepareandinterpretacost volume profit CVP graph CVPRelationshipsinGraphicForm Therelationshipamongrevenue cost profitandvolumecanbeexpressedgraphicallybypreparingaCVPgraph Racingdevelopedcontributionmarginincomestatementsat300 400 and500unitssold WewillusethisinformationtopreparetheCVPgraph CVPGraph Units Dollars InaCVPgraph unitvolumeisusuallyrepresentedonthehorizontal X axisanddollarsonthevertical Y axis CVPGraph Units Dollars CVPGraph Dollars Units CVPGraph Dollars Units CVPGraph Dollars Units ProfitArea LossArea LearningObjective3 Usethecontributionmarginratio CMratio tocomputechangesincontributionmarginandnetoperatingincomeresultingfromchangesinsalesvolume ContributionMarginRatio Thecontributionmarginratiois ForRacingBicycleCompanytheratiois Each 1 00increaseinsalesresultsinatotalcontributionmarginincreaseof40 ContributionMarginRatio Or intermsofunits thecontributionmarginratiois ForRacingBicycleCompanytheratiois ContributionMarginRatio QuickCheck CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage WhatistheCMRatioforCoffeeKlatch a 1 319b 0 758c 0 242d 4 139 CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage WhatistheCMRatioforCoffeeKlatch a 1 319b 0 758c 0 242d 4 139 QuickCheck LearningObjective4 Showtheeffectsoncontributionmarginofchangesinvariablecosts fixedcosts sellingprice andvolume ChangesinFixedCostsandSalesVolume WhatistheprofitimpactifRacingcanincreaseunitsalesfrom500to540byincreasingthemonthlyadvertisingbudgetby 10 000 ChangesinFixedCostsandSalesVolume Salesincreasedby 20 000 butnetoperatingincomedecreasedby 2 000 ChangesinFixedCostsandSalesVolume TheShortcutSolution ChangeinVariableCostsandSalesVolume WhatistheprofitimpactifRacingcanusehigherqualityrawmaterials thusincreasingvariablecostsperunitby 10 togenerateanincreaseinunitsalesfrom500to580 ChangeinVariableCostsandSalesVolume Salesincreaseby 40 000 andnetoperatingincomeincreasesby 10 200 ChangeinFixedCost SalesPriceandVolume WhatistheprofitimpactifRacing 1 cutsitssellingprice 20perunit 2 increasesitsadvertisingbudgetby 15 000permonth and 3 increasessalesfrom500to650unitspermonth Salesincreaseby 62 000 fixedcostsincreaseby 15 000 andnetoperatingincomeincreasesby 2 000 ChangeinFixedCost SalesPriceandVolume ChangeinVariableCost FixedCostandSalesVolume WhatistheprofitimpactifRacing 1 paysa 15salescommissionperbikesoldinsteadofpayingsalespersonsflatsalariesthatcurrentlytotal 6 000permonth and 2 increasesunitsalesfrom500to575bikes ChangeinVariableCost FixedCostandSalesVolume Salesincreaseby 37 500 variablecostsincreaseby 31 125 butfixedexpensesdecreaseby 6 000 ChangeinRegularSalesPrice IfRacinghasanopportunitytosell150bikestoawholesalerwithoutdisturbingsalestoothercustomersorfixedexpenses whatpricewoulditquotetothewholesalerifitwantstoincreasemonthlyprofitsby 3 000 ChangeinRegularSalesPrice LearningObjective5 Computethebreak evenpointinunitsalesandsalesdollars Break EvenAnalysis Break evenanalysiscanbeapproachedintwoways EquationmethodContributionmarginmethod EquationMethod Profits Sales Variableexpenses Fixedexpenses Sales Variableexpenses Fixedexpenses Profits OR Break EvenAnalysis HereistheinformationfromRacingBicycleCompany EquationMethod Wecalculatethebreak evenpointasfollows Sales Variableexpenses Fixedexpenses Profits 500Q 300Q 80 000 0Where Q Numberofbikessold 500 Unitsellingprice 300 Unitvariableexpense 80 000 Totalfixedexpense EquationMethod 500Q 300Q 80 000 0 200Q 80 000Q 80 000 200perbikeQ 400bikes Wecalculatethebreak evenpointasfollows Sales Variableexpenses Fixedexpenses Profits EquationMethod Theequationcanbemodifiedtocalculatethebreak evenpointinsalesdollars Sales Variableexpenses Fixedexpenses Profits X 0 60X 80 000 0Where X Totalsalesdollars0 60 Variableexpensesasa ofsales 80 000 Totalfixedexpenses EquationMethod X 0 60X 80 000 00 40X 80 000X 80 000 0 40X 200 000 Sales Variableexpenses Fixedexpenses Profits Theequationcanbemodifiedtocalculatethebreak evenpointinsalesdollars ContributionMarginMethod Thecontributionmarginmethodhastwokeyequations ContributionMarginMethod Let susethecontributionmarginmethodtocalculatethebreak evenpointintotalsalesdollarsatRacing QuickCheck CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage Whatisthebreak evensalesinunits 872cupsb 3 611cupsc 1 200cupsd 1 150cups CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage Whatisthebreak evensalesinunits 872cupsb 3 611cupsc 1 200cupsd 1 150cups QuickCheck QuickCheck CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage Whatisthebreak evensalesindollars a 1 300b 1 715c 1 788d 3 129 CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage Whatisthebreak evensalesindollars a 1 300b 1 715c 1 788d 3 129 QuickCheck LearningObjective6 Determinethelevelofsalesneededtoachieveadesiredtargetprofit TargetProfitAnalysis Theequationandcontributionmarginmethodscanbeusedtodeterminethesalesvolumeneededtoachieveatargetprofit SupposeRacingBicycleCompanywantstoknowhowmanybikesmustbesoldtoearnaprofitof 100 000 TheCVPEquationMethod Sales Variableexpenses Fixedexpenses Profits 500Q 300Q 80 000 100 000 200Q 180 000Q 900bikes TheContributionMarginApproach Thecontributionmarginmethodcanbeusedtodeterminethat900bikesmustbesoldtoearnthetargetprofitof 100 000 QuickCheck CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 Howmanycupsofcoffeewouldhavetobesoldtoattaintargetprofitsof 2 500permonth a 3 363cupsb 2 212cupsc 1 150cupsd 4 200cups CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 Howmanycupsofcoffeewouldhavetobesoldtoattaintargetprofitsof 2 500permonth a 3 363cupsb 2 212cupsc 1 150cupsd 4 200cups QuickCheck LearningObjective7 Computethemarginofsafetyandexplainitssignificance TheMarginofSafety Themarginofsafetyistheexcessofbudgeted oractual salesoverthebreak evenvolumeofsales Marginofsafety Totalsales Break evensales Let slookatRacingBicycleCompanyanddeterminethemarginofsafety TheMarginofSafety IfweassumethatRacingBicycleCompanyhasactualsalesof 250 000 giventhatwehavealreadydeterminedthebreak evensalestobe 200 000 themarginofsafetyis 50 000asshown TheMarginofSafety Themarginofsafetycanbeexpressedas20 ofsales 50 000 250 000 TheMarginofSafety Themarginofsafetycanbeexpressedintermsofthenumberofunitssold ThemarginofsafetyatRacingis 50 000 andeachbikesellsfor 500 QuickCheck CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage Whatisthemarginofsafety a 3 250cupsb 950cupsc 1 150cupsd 2 100cups CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage Whatisthemarginofsafety a 3 250cupsb 950cupsc 1 150cupsd 2 100cups QuickCheck CostStructureandProfitStability Coststructurereferstotherelativeproportionoffixedandvariablecostsinanorganization Managersoftenhavesomelatitudeindeterminingtheirorganization scoststructure CostStructureandProfitStability Thereareadvantagesanddisadvantagestohighfixedcost orlowvariablecost andlowfixedcost orhighvariablecost structures Anadvantageofahighfixedcoststructureisthatincomewillbehigheringoodyearscomparedtocompanieswithlowerproportionoffixedcosts Adisadvantageofahighfixedcoststructureisthatincomewillbelowerinbadyearscomparedtocompanieswithlowerproportionoffixedcosts LearningObjective8 Computethedegreeofoperatingleverageataparticularlevelofsalesandexplainhowitcanbeusedtopredictchangesinnetoperatingincome OperatingLeverage Ameasureofhowsensitivenetoperatingincomeistopercentagechangesinsales OperatingLeverage AtRacing thedegreeofoperatingleverageis5 OperatingLeverage Withanoperatingleverageof5 ifRacingincreasesitssalesby10 netoperatingincomewouldincreaseby50 Here stheverification OperatingLeverage 10 increaseinsalesfrom 250 000to 275 000 resultsina50 increaseinincomefrom 20 000to 30 000 QuickCheck CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage Whatistheoperatingleverage a 2 21b 0 45c 0 34d 2 92 CoffeeKlatchisanespressostandinadowntownofficebuilding Theaveragesellingpriceofacupofcoffeeis 1 49andtheaveragevariableexpensepercupis 0 36 Theaveragefixedexpensepermonthis 1 300 2 100cupsaresoldeachmonthonaverage Whatistheoperatingleverage a 2 21b 0 45c 0 34d 2 92 QuickCheck QuickCheck AtCoffeeKlatchtheaveragesellingpriceofacupofcoffeeis 1 49 theaver