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1g CVP Analysis Excel SC
1g CVP Analysis Excel SC
.
Req.:
Assume the following: 1. Compute the profit. 4,000 units sold
2. Prepare the income statement using:
Creative Bottles Company produces high-quality bottles that are sold P8 per bottle.
Variable and fixed costs are as follows: a. Functional form (traditional)
b. Contribution margin form
Variable Cost Fixed Costs per Month
Manufacturing: Factory overhead P5,000
Direct materials P1.00 Selling & Administrative 10,000
Direct labor 0.50 Total P15,000
Factory overhead 0.50 P2.00 =======
Selling & Administrative 1.00
Total P3.00
======
C.
Condensed contribution income statement
% of
Total Per Unit Sales
Sales (4,000 units) 32,000 8 100.0%
Variable costs 12,000 3 37.5%
Contribution margin 20,000 5 62.5% 500
Fixed costs 15,000 505
Net income 5,000
Contribution
Margin Ratio
or CMR
Contribution
Margin Per
Unit or CMU
E. TRY THESE!
CASE: Quiano Manufacturing Company sells its product at P12 per unit. It incurs Solution:
avariable cost of P5 per unit and fixed costs of P50,000. Selling price is P5 per unit.
Req.: Using the contribution approach, determine the following: #1&2
1. Variable cost ratio S (U) 1 unit %
2. Contribution margin ratio 100% S (P) 12 100%
3. Break-even sales (BES) in pesos
4. Break-even sales in units VC 5 42%
5. Sales in P and in U if the target net profit is P120,000. CM 7 58%
6. Total variable costs if there were 8,000 units sold. FC
7. Unit contribution margin and the net profit if the Quiano sold one unit more
than the break-even. NI
8. BES in P if the variable cost per unit decreased by 20%.
9. Net profit if Quiano sold 10,000 units after increasing the variable cost to P6
per unit.
10. Using the original BES as basis, determine the margin of safety if target sales is
P90,000. (Margin of safety is the difference between the target or actual sales
and the BES.)
11. Using the original BES as basis, determine the net income after tax assuming a
tax rate of 20% and the contribution margin amounted to P75,000.
6. Total variable costs if there were 8,000 units sold.
7. Unit contribution margin and the net profit if the Quiano sold one unit more
than the break-even.
8. BES in P if the variable cost per unit decreased by 20%.
9. Net profit if Quiano sold 10,000 units after increasing the variable cost to P6
per unit.
10. Using the original BES as basis, determine the margin of safety if target sales is
P90,000. (Margin of safety is the difference between the target or actual sales #11
and the BES.) S (U) 10,776
11. Using the original BES as basis, determine the net income after tax assuming a
tax rate of 20% and the contribution margin amounted to P75,000. S (P) 128,571 100%
12. Using the original BES as basis, determine the desired sales in P and U if the VC 53,571 42%
targetted after-tax profit is P50,000. Assume a tax rate of 25%. CM 75,000 58%
FC 50,000
NI 25,000 100%
TAX 5000 20%
NI(2) 20,000 80%
F. SALES MIX
Notes:
* Sales mix is the relative proportion in which a company’s products are sold.
* Different products have different selling prices, cost structures, and contribution
margins.
CASE: Racing Bycylce Company. Let’s assume that Racing Bicycle Company sells bikes
and carts and that the sales mix between the two products remains steady. The
following information are given:
BES
Bicycles Cart Total
S 160,377 100% 192,453 100% 352,830 100.0%
VC 96,226 60% 86,604 45% 182,830 51.8%
CM 64,151 40% 105,849 55% 170,000 48.2%
FC 170,000
NI -
G. TRY THIS!
140
CASE: Brandy Company. Let’s assume that Brandy Company sproduces and sells
bDeluxe and Regular brands of wine. The company 's sales mix for these wine is 1:1
between the two products remains steady. The following information are given:
Req.:
1. Compute the required sale in P and in U if the desired profit is P5,000.
2. BES in P and in U.
3. BES in P and in U if the sales mix chagned from 1:1 to 1:3.
550
#3&4 #5 #6 #7 #8 #9
7,143 34,000 8,000 7,144 6,250
85,714 291,429 85,728 12 100% 75,000 12 100% 120,000
40,000 35,720 4 33% 25,000 6 50% 60,000
50,000 170,000 50,008 8 67% 50,000 6 50% 60,000
50,000 50,000 50,000 50,000 50,000
- 120,000 8 0 10,000
#12
16,667
200,000
116,667
50,000
66,667 100%
25%
50,000 75%
FORMULA APPROACH
A. BASIC FORMULAS
BASIC FORMULAS
B. BES
BES FORMULAS
Profit = (selling price x unit volume) - [ fixed Cost + (variable cost per
unit x unit volume)] = 0
or
P = (SP)(UV) - [FC + (VC/U)(UV)] = 0
8x = P15,000 + 3x
Solving for x:
8x - 3x = 15,000
5x = 15,000
x = 15,000 / 5
x = 5,000 units BES in Units (U)
Assuming that the business firm sells its product at P8 per unit, variable
costs is P3 per unit and fixed costs is P15,000 per month, the BES can
be computed at:
8x = P15,000 + 3x
Solving for x:
8x - 3x = 15,000
5x = 15,000
x = 15,000 / 5
x = 5,000 units BES in Units (U)
C. BES
Assuming that the business firm sells its product at P8 per unit, variable
costs is P3 per unit and fixed costs is P15,000 per month, the BES can be Computation of CMU:
computed at: 1 unit
S 8
Using the formula:
BES (U) = FC / CMU VC 3
BES (U) = 15,000 / 5 CMU 5
BES (U) = 3,000 units
and
BES (P) = FC / CMR Computation of CMR:
BES (P) = 15,000 / 63% CMU 5
BES (P) = P24,000 Divide by S 8
CMR 63%
Assuming that the business firm sells its product at P8 per unit, variable
costs is P3 per unit and fixed costs is at P15,000 per month. Compute S
if the business is targetting P20,000 in profit.
Assuming that the business firm sells its product at P8 per unit, variable
costs is P3 per unit and fixed costs is at P15,000 per month. Compute S
if the business is targetting P20,000 in profit.
or
E. TRY THESE!
CASE: Quiano Manufacturing Company sells its product at P12 per unit. It
incurs avariable cost of P5 per unit and fixed costs of P50,000. Selling price is
P5 per unit.
Req.: Using the contribution approach, determine the following:
1. Variable cost ratio
2. Contribution margin ratio
3. Break-even sales (BES) in pesos
4. Break-even sales in units
5. Sales in P and in U if the target net profit is P120,000.
6. Unit contribution margin and the net profit if the Quiano sold one unit
more
than the break-even.
7. Net profit if Quiano sold 10,000 units after increasing the variable cost to
P6
per unit.
7. Net profit if Quiano sold 10,000 units after increasing the variable cost to
P6
per unit.
BREAK-EVEN CHART
CASE 1
Given:
Y
Sales (U) Sales (P) TVC TFC TC (P)
300 150,000 90,000 80,000 170,000 450,000
400 200,000 120,000 80,000 200,000 400,000
500 250,000 150,000 80,000 230,000
350,000 S
Profit area
300,000
TC
250,000
200,000
Loss area BES
150,000
100,000
FC
50,000
0 X
0 100 200 300 400 500 600
CASE 2
Given:
Observations Volume Sales Total VC Fixed Cost TFC
1 10,000 50,000 30,000 15,000 45,000 5
2 9,000 45,000 27,000 15,000 42,000 5
3 8,000 40,000 24,000 15,000 39,000 5
4 7,000 35,000 21,000 15,000 36,000 5
5 6,000 30,000 18,000 15,000 33,000 5
6 5,000 25,000 15,000 15,000 30,000 5
7 4,000 20,000 12,000 15,000 27,000 5
8 3,000 15,000 9,000 15,000 24,000 5
9 2,000 10,000 6,000 15,000 21,000 5
10 1,000 5,000 3,000 15,000 18,000 5
Required:Break-even Chart
00
Use of DATA excel function
MODEL