会计学原理英文课件-(21)

1、Chapter 21Cost-Volume-Profit Analysis Cost-volume-profit analysis is used to answer questions such as:What sales volume is needed to earn a target income?What is the change in income if selling prices decline and sales volume increases?How much does income increase if we install a new machine to red

2、uce labor costs?What is the income effect if we change the sales mix of our products or services?Identifying Cost BehaviorFixed CostsTotal fixed costs remain constant asactivity increases.Number of Local CallsMonthly Basic Telephone BillCost per calldeclines asactivity increases.Number of Local Call

3、s Monthly Basic Telephone Bill per Local CallC 1Variable Costs Total variable costsincrease asactivity increases.Minutes TalkedTotal CostsCost per MinuteMinutes TalkedCost per Minuteis constant asactivity increases.C 1Mixed CostsMixed costs contain a fixed portion that is incurred even when the faci

4、lity is unused, and a variable portion that increases withusage. Utilities typically behave in this manner.Fixed MonthlyUtility ChargeVariable Cost per KWActivity (Kilowatt Hours) Total Utility CostTotal mixed cost C 1Step-Wise CostsTotal cost increases to a new higher cost for the next higher range

5、 of activity, but remains constant within a range of activity. C 1Curvilinear Costs Costs that increase when activityincreases, but in a nonlinear manner.C 1 Measuring Cost BehaviorThe objective is to classify all costs as either fixed or variable. We will look at three methods:Scatter diagrams.The

6、high-low method.Leastsquares regression.A scatter diagram is a plot of cost data points on a graph. It is almost always helpful to plot cost data to be able to observe a visual picture of the relationship between cost and activity.P 10 1 2 3 4 5 6*Total Cost in1,000s of Dollars10200*Activity, 1,000s

7、 of Units ProducedEstimated fixed cost = 10,000Draw a line through the plotted data points so that about equal numbers of points fall above and below the line. Scatter DiagramsP 1Vertical distance is the change in cost.Horizontal distance is the change in activity.Unit Variable Cost = Slope = in cos

8、t in units0 1 2 3 4 5 6*Total Cost in1,000s of Dollars10200*Activity, 1,000s of Units ProducedScatter DiagramsP 1The following relationships between unitsproduced and total cost are observed:Using these two levels of activity, compute: the variable cost per unit. the total fixed cost. The High-Low M

9、ethodP 1The High-Low MethodTotal cost = $17,525 + $0.17 per unit producedP 1 Variable cost per unit is determined as follows: Fixed costs are determined as follows:The objective of the cost analysis remains the same: determination of total fixed cost and the variable unit cost.Least-Squares Regressi

10、onLeast-squares regression is usually covered in advanced cost accounting courses. It is commonly used with spreadsheet programs or calculators.P 1Using Break-Even AnalysisThe break-even point (expressed in units of product or dollars of sales) is the unique sales level at which a company earns neit

11、her a profit nor incurs a loss.A 1Contribution margin is the amount by which revenue exceeds the variable costs of producing the revenue.Contribution Margin and its MeasuresTotal contribution margin is $60,000 and the contribution margin per unit sold is $30.A 1Contribution Margin and its MeasuresCo

12、ntributionmargin ratio Contribution margin per unitSales price per unit=Contributionmargin ratio =$30 per unit$100 per unit= 30%A 1How much contribution margin must Rydell Company have to cover its fixed costs (break-even)?Answer: $24,000Computing the Break-Even PointHow many units must Rydell sell

13、to cover its fixed costs (break-even)?Answer: $24,000 $30 per unit = 800 unitsP 2We have just seen one of the basic CVP relationships the break-even computation.Computing the Break-Even PointBreak-even point in units = Fixed costsContribution margin per unitP 2Unit sales price less unit variable cos

14、t($30 in previous example)The break-even formula may also be expressed in sales dollars. Unit contribution margin Unit sales priceBreak-even point in dollars = Fixed costsContribution margin ratioP 2Computing the Break-Even PointPreparing a CVP ChartP 3 A limited range of activity called the relevan

15、t range, where CVP relationships are linear. Unit selling price remains constant. Unit variable costs remain constant. Total fixed costs remain constant. Production = sales (no inventory changes). Making Assumptions inCost-Volume-Profit AnalysisP 3Working with Changesin EstimatesWhat happens to the

16、break-even point if management can increase the sales price to $105, with no changes in fixed or variable costs?Break-even point in units = Fixed costsContribution margin per unitBreak-even point in units = $24,000$105 $70= 686 units P 3Income (pretax) = Sales Variable costs Fixed costsComputing Inc

17、ome from Sales and CostsRydell expects to sell 1,500 units at $100 each next month. Fixed costs are $24,000 per month and the unit variable cost is $70. What amount of income should Rydell expect?Income (pretax) = Sales Variable costs Fixed costs = 1,500 units $100 1,500 units $70 $24,000 = $21,000C

18、 2Computing Salesfor a Target IncomeBreak-even formulas may be adjusted to show the sales volume needed to earn any amount of income.Unit sales = Fixed costs + Target pretax incomeContribution margin per unit Dollar sales = Fixed costs + Target pretax incomeContribution margin ratioC 2Before-tax inc

19、ome = Target net income1 - tax rateComputing Sales (Dollars) for aTarget Net IncomeTo convert target net income to before-tax income, use the following formula:C 2Computing Sales (Dollars) for aTarget Net IncomeRydell has a monthly target net income of $9,000. The unit selling price is $100. Monthly

20、 fixed costs are $24,000, the unit variable cost is $70, and the tax rate is 25 percent. What is Rydells target pretax income?Pretax income = Target net income1 - tax ratePretax income = = $12,000$9,0001 - 0.25C 2Rydell has a monthly target after-tax income of $9,000. The unit selling price is $100.

21、 Monthly fixed costs are $24,000, the unit variable cost is $70, and the tax rate is 25 percent. Lets compute the sales revenue that Rydell will need to earn $12,000 of pretax income? Dollar sales = Fixed costs + Target pretax income Contribution margin ratioDollar sales = = $120,000 $24,000 + $12,0

22、0030%C 2Computing Sales (Dollars) for aTarget Net IncomeContribution margin per unitUnit sales = Fixed costs + Target pretax incomeUnit sales = = 1,200 units$24,000 + $12,000$30 per unitComputing Sales (Units) for a Target Net IncomeThe formula for computing dollar sales may be used to compute unit

23、sales by substituting contribution per unit in the denominator.C 2Computing the Margin of SafetyMargin of safety is the amount by which sales can drop before the company incurs a loss. Margin of safety maybe expressed as a percentage of expected sales.Margin of safety Expected sales - Break-even sal

24、es percentage Expected sales=If Rydells sales are $100,000 and break-even sales are$80,000, what is the margin of safety percentage? C 2Margin of safety $100,000 - $80,000 percentage $100,000= 20% Rydell Company is considering buying a new machine that would increase monthly fixed costs from $24,000

25、 to $30,000, but decrease unit variable costs from $70 to $60. The $100 per unit selling price would remain unchanged. What is the new break-even point in dollars? Using Sensitivity AnalysisRevised Break-evenpoint in dollars Revised fixed costsRevised contribution margin ratioRevised Break-evenpoint

26、 in dollars $30,00040%= $75,000= = C 2 The CVP formulas can be modified for use when a company sells more than one product. The unit contribution margin is replaced with the contribution margin for a composite unit.A composite unit is composed of specific numbers of each product in proportion to the

27、 product sales mix.Sales mix is the ratio of the volumes of the various products.Computing a MultiproductBreak-Even PointP 4The resulting break-even formulafor composite unit sales is:Break-even pointin composite unitsFixed costsContribution marginper composite unit=Consider the following example:Co

28、ntinueComputing a MultiproductBreak-Even PointP 4Hair-Today offers three cuts as shown below. Annual fixed costs are $192,000. Compute the break-even point in composite units and in number of units for each haircut at the given sales mix. A 4:2:1 sales mix means that if there are 500 budget cuts, th

29、en there will be 1,000 ultra cuts, and 2,000 basic cuts.Computing a MultiproductBreak-Even PointP 4Contribution margin per composite unitStep 1: Compute contribution margin per composite unit.Computing a MultiproductBreak-Even PointP 4Break-even pointin composite unitsFixed costsContribution marginper composite unit=Step 2: Compute break-even point in composite units.Break-even pointin composite units$192,000$64.00 per composite unit=Break-even pointin composite units= 3,000 composite unitsComputing a Multipro