Lecture Management accounting: An Australian perspective: Chapter 17 - Kim Langfield-Smith

Chia sẻ: Ngocnga Ngocnga | Ngày: | Loại File: PPT | Số trang:30

Thêm vào BST

Báo xấu

53
lượt xem 2
download

Download Vui lòng tải xuống để xem tài liệu đầy đủ

This chapter introduce the cost volume profit analysis. This chapter includes contents: Cost volume profit analysis at the Melbourne Theatre Company, the break-even point, the importance of the break-even point at Linney's, graphing cost volume profit relationships,...

Chủ đề:

Bình luận(0) Đăng nhập để gửi bình luận!

Lưu

Nội dung Text: Lecture Management accounting: An Australian perspective: Chapter 17 - Kim Langfield-Smith

Chapter 17 Cost volume profit analysis Copyright 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith 1
Cost volume profit (CVP) analysis  A technique used to determine the effects of changes in an organisation’s sales volume on its costs, revenue and profit  Can be used in profitseeking and notfor profit organisations Copyright ª 2003 McGrawHill Australia Pty Ltd, 2
The break-even point  The volume of sales where the total revenues and expenses are equal, and the operation breaks even  Can be calculated for an entire organisation or individual projects or activities Copyright ª 2003 McGrawHill Australia Pty Ltd, 3
Formulas Fixed expenses Break - even point (in units) = Unit contributi on margin Fixed expenses Break - even point (in sales dollar) = Unit contribution margin ratio Copyright ª 2003 McGrawHill Australia Pty Ltd, 4
Terminology  Contribution margin (or variable costing) statement A reporting format where costs are reported by cost behaviour and a contribution margin is calculated  Total contribution margin The difference between the sales revenue and the variable costs The amount available to cover fixed costs and then contribute to profits continued Copyright ª 2003 McGrawHill Australia Pty Ltd, 5
Terminology  Unit contribution margin The difference between the sales price per unit and variable cost per unit  Contribution margin ratio The unit contribution margin divided by the unit sales price The proportion of each sales dollar available to cover fixed costs and earn a profit continued Copyright ª 2003 McGrawHill Australia Pty Ltd, 6
Terminology  Contribution margin percentage The unit contribution margin ratio multiplied by 100 The percentage of each sales dollar available to cover fixed costs and earn a profit Copyright ª 2003 McGrawHill Australia Pty Ltd, 7
Cost volume profit (CVP) graph  Shows how costs, revenue and profits change as sales volume changes  Five steps Draw the fixed expense line Draw the total expense line Draw the total revenue line Breakeven point—where the total revenue and total expense lines intersect Copyright ª 2003 McGrawHill Australia Pty Ltd, 8
Copyright ª 2003 McGrawHill Australia Pty Ltd, 9
Profit volume (PV) graph  Shows the total amount of profit or loss at different sales volumes  The graph intercept the vertical axis at the amount equal to the fixed costs  The breakeven point is the point at which the line crosses the horizontal axis Copyright ª 2003 McGrawHill Australia Pty Ltd, 10
Copyright ª 2003 McGrawHill Australia Pty Ltd, 11
Target net profit  A desired profit level determined by management  Can be used within the breakeven formula Fixed expenses + target profit Target sales volume = Unit contribution margin Copyright ª 2003 McGrawHill Australia Pty Ltd, 12
CVP analysis and management decision making  Common applications include Safety margin Changes in fixed expenses Changes in the unit contribution margin Multiple changes in key variables Copyright ª 2003 McGrawHill Australia Pty Ltd, 13
Safety margin  Difference between the budgeted sales revenue and the breakeven sales revenue  Gives a feel for how close projected operations are to the breakeven point Copyright ª 2003 McGrawHill Australia Pty Ltd, 14
Changes in fixed expenses  When estimates of fixed costs are revised, the breakeven point will change Percentage change in fixed expenses will lead to similar increase in the breakeven point (in units or dollars)  Different fixed costs may apply to different levels of sales/production volume More than one breakeven point Copyright ª 2003 McGrawHill Australia Pty Ltd, 15
Changes in the unit contribution margin  Change in unit variable expenses Changes the unit contribution margin A new breakeven point An increase in unit variable expenses will increase the breakeven point continued Copyright ª 2003 McGrawHill Australia Pty Ltd, 16
Changes in the unit contribution margin  Change in sales price Changes the unit contribution margin A new breakeven point An increase in unit price will lower the break even point Copyright ª 2003 McGrawHill Australia Pty Ltd, 17
Multiple changes in key variables  May involve Increasing unit prices Undertaking an advertising campaign Hiring a new storage facility  An incremental approach Focuses on the difference in the total contribution margin, fixed expenses and profits under the two alternatives Copyright ª 2003 McGrawHill Australia Pty Ltd, 18
CVP analysis with multiple products  Sales mix The relative proportions of each type of product sold by the organisation  Weighted average unit contribution margin The average of the products’ unit contribution margins, weighted by the sales mix Fixed expenses Break - even point = Weighted average unit contributi on margin Copyright ª 2003 McGrawHill Australia Pty Ltd, 19
Including income taxes Sales volume required to earn target after - tax profit target net profit after tax Fixed expenses + (1 - t) = Unit contribution margin Copyright ª 2003 McGrawHill Australia Pty Ltd, 20