Finance & Accounts: Contribution Analysis & Break Even Analysis

Contribution Analysis & Break Even Analysis

Note Taking Guide
Be sure you have detailed notes which answer the following in depth from Hoang 238-
250.
Do not superficially copy & regurgitate.
Discuss, question & process:
1. What are the concepts of "contribution", “unit contribution” &”total contribution”?
2. Why is Contribution Analysis so significant with regards to the three (3) ways profit can be
increased?
3. What are three (3) broad strategies suggested by Contribution Analysis to increase
profits?
4. To what extent do these strategies speak to specific elements of the CUEGIS Analytical
Framework?
5. What are the six (6) uses of the Contribution Analysis for firms?
6. What are the three (3) possible situations a firm finds itself in?
7. What is a “Break-Even Analysis” (BEA) & how might it help to inform managers?
8. What is a common criticism of BEA?
9. What are the “Break-Even Point” & “Break-Even Quantity”? How are they determined &
related? How are they different? How do they relate to the BEA?
10. How do you interpret & explain all the different elements of a Break-Even Chart?
11. What are the six (6) steps needed in order to create a Break-Even Chart?
12. How do you calculate the sum of fixed costs, break even quantity & margin of safety?
13. What are two (2) common mistakes made with regards to calculating & graphing BEA, BEP
& BEQ? What will you do to avoid these mistakes?
14. What is the “Margin of Safety” concept? What does it tell us? Why is it so significant?
15. What are five (5) factors that might impact the profit/loss of a firm?
16. What are five (5) benefits of BEA?
17. What are three (3) assumptions behind the BEA & how might they impact its reliability &
use-value?
18. What are four (4) limitations of the BEA & how might each limitation impact a firm’s
decision to use BEA?
19. What are four (4) ways in which BEA might be considered a scientific management
planning tool to aid strategic decisions?
20. What are the fundamental considerations we must acknowledge when using quantitative
tools?
21. To what extent should we be cautious about BEA & other tools?
22. How might we reduce the incomplete picture provided by using a tool like BEA?
23. How might a Break Even Analysis help Habitat for Humanity achieve its mission? To what
extent would you recommend its use?

Mr. A: BizMan 1
 Finance & Accounts: Contribution Analysis & Break Even Analysis
BizMan Quantitative Tools: The Great Debate
1. Which of the following tools is most helpful to firms & why?
2. What are the strengths & limitations of the tool in relation to other tools?
3. If the tool is not the most helpful, why not?
4. What additional specific qualitative & quantitative tools would best complement your tool
(minimum two (2) each with details)?
5. What CUEGIS links can be applied through case study(ies) to support your analysis & evaluation
of your tool?
1. Profit Loss Account: Charlie & Lenny
2. Balance Sheet: Hai & Tuan Minh
3. Depreciation: Comay & Gabi
4. Liquidity Ratio: Sabin & Jae Chan
5. Efficiency Ratio: Josh & Ji Soek
6. Working Capital Cycle: Khoa & Li Hui
7. Cash Flow Forecasts: Jinny & Pooja
8. Average Rate of Return: Da & Sung Eun
9. Net Present Value: Hyo Rim & Ha
10. Variance Analysis: Richard & Yoo Chan

Teams should arrive in class with a complete & thorough set of notes on their quantitative
tool of focus.
By the end of class, each team should have made significant progress on their properly
organised & professional poster which provides the following information:
1. A definition & scope of application of their quantitative tool;
2. Any & all formulas, tables & graphs associated with their tool;
3. An analysis of the strengths & use-value of the tool to firms;
4. An evaluation of the limitations & weaknesses of the tool;
5. An analysis of additional specific qualitative & quantitative tools (minimum two each) that
would best complement your tool each with the details of these tools.
It is recommended that you explore qualitative tools you are less familiar with.
Be sure to consider relevant case studies & significant CUEGIS links can be applied through
these case study(ies) to support your analysis & evaluation of your tool.
Be sure to upload your notes & evidence of progress by CoB 16:00 each day.

Mr. A: BizMan 2