Formulas

1. Break-even point (units): Fixed cost/Contribution per unit

2. Break-even point ($): Selling price x Break-even point (units) ($)
3. Contribution per unit: Selling price per unit – Variable price per unit ($)
4. Contribution: Total sales revenue – Total variable costs ($)
5. Contribution: Number of units x Contribution per unit ($)
6. Number of units: Fixed cost contribution per unit x Selling price per unit
7. Margin of safety: (Budgeted units - BEP)/Budget units (%)
8. Profit-volume ratio: (Contribution/Sales) x 100 (%)
9. Number of units to make a specified profit: (Fixed cost + Required profit)/ Contribution per unit
10. Profit: Contribution – Total (Fixed/Variable) cost OR Revenue – Expenses ($)
11. Cash outflow: Purchases (cash payments inventory) + Total payments (expenses) ($)
12. Surplus/(deficit) for the month (net cash inflow): Total receipts (sales) – Total payments (expenses) ($)
13. Surplus/(deficit) for the month (net cash inflow): Cash inflows – Cash outflows ($)
14. Closing cash balance: Net cash flow + Opening cash balance ($)
15. Absorption cost per unit: Total cost/Production unit ($)

16.
Contribution & BEP Week 5

Exercise 1
Đề bài
Selling price per unit £90 Question:
Variable costs per unit £55 What will the company's profit be for the months if sales were:
Fixed costs £58,000 (Lợi nhuận công ty là bao nhiêu nếu như số sản phẩm trong tháng là:)
Contribution per unit £35 a) 1,500 units
b) 2,000 units
c) 2,500 units

Contribution: 1,500 units x £35 £52,500

Less: fixed cost £58,000
Loss of the month (£5,500) [£52,500 – £58,000]
Contribution: 2,000 units x £35 £70,000
Less: fixed cost £58,000
Loss of the month £12,000 [£70,000 – £58,000]
Contribution: 2,500 units x £35 £87,500
Less: fixed cost £58,000
Loss of the month £29,500 [£87,500 – £58,000]

Exercise 2:
Đề bài
Selling price per unit £3,500 Question:
What will the company's profit be for the months if
Variable costs per unit £1,850 sales were:
(Lợi nhuận công ty là bao nhiêu nếu như số sản
Fixed costs £2,000,000 phẩm trong tháng là:)
Contribution per unit £1,650 [£3,500 – £1,850] a) 1,000 units
b) 1,250 units
c) 1,500 units

Contribution: 1,000 units x £1,650 £1,650,000

Less: fixed cost £2,000,000
Loss of the month (£350,000) [£1,650,000 – £2,000,000]
Contribution: 1,250 units x £1,650 £2,062,500
Less: fixed cost £2,000,000
Loss of the month £62,500 [£2,062,000 – £2,000,000]
Contribution: 1,500 units x £1,650 £2,475,000
Less: fixed cost £2,000,000
Loss of the month £475,000 [£2,475,000 – £2,000,000]

Exercise 3:
 Đề bài
Selling price per unit £24
Variable cost per unit £11
Fixed costs £368,000
Budgeted units £35,000
Contribution per unit £13 [£24 - £11]

(i) How many units need to be sold to break even?

(Phải cần bao nhiêu sản phẩm để hoà vốn?)
Break-even point (unit) 28,308 [£368,000 / £13] units
(ii) What will total sales revenue be at break-event point?
(Tổng doanh thu là bao nhiêu ở điểm hoà vốn)
Sales revenue at break-even £679,385 [28,308 x £24]
(iii) What is the margin of safety?
(Biên an toàn là bao nhiêu?)
Margin of safety 19.1% [(£35,000 – 28,308) / £35,000]
(iv) How many units must be sold to make a profit of £50,000?
(Có bao nhiêu sản phẩm được bán ra nếu doanh thu là £50,000?)
Number of unit sold to make a specifed
32,154 [(£368,000 + £50,000) / £13] units
profit

Exercise 4:
 Đề bài
Selling price per meal £40
Variable cost per meal £10
Fixed cost £9,300

a)
Question: What would be the contribution per unit & current break-even
output?
(Phí đóng góp mỗi sản phẩm và sản lượng hoà vốn là bao nhiêu?
Contribution per unit £30 [£40 – £10]
Current break-even output 310 [£9,300/£30]

b)
What is the margin of safety assuming that Golden sells 1,200 meals per
months?
(Biên an toàn là bao nhiều nêu mỗi tháng bán được 1,200 xuất ăn?)
Margin of safety 74% [(1,200 - 310)/1,200]

c)
What would happen to break-even output if the average selling price per meal
increased to £50?
(Sản lượng hoà vốn là bao nhiêu nếu giá là £50 mỗi xuất ăn?)
Selling price per meal £50
Variable cost per meal £10
Fixed cost £9,300
Contribution per unit £40 [£50 – £10]
Break-even output 232.5 [£9,300 / £40]

d)
What would be the margin of safety if monthly fixed cost were 20% higher but
there was no change in the number of meals served per month and the average
selling price stays at £40 per meal?
(Biên an toàn là bao nhiêu nếu chi phí cố định tăng lên 20% mà số lượng xuất ăn
được bán ra mỗi tháng không thay đổi và trung bình giá bán vẫn giữ ở mức £40
mỗi xuất ăn?)
Fixed cost were 20% higher £11,160 [9,300 x 20%]
Selling price per meal £40
Contribution per unit £30
Break-even point 372 [£11,160 / £30]
Margin of safety 69% [(1,200-372) / 1,200]

Marginal costing method - Absorption costing method Week 7

Exercise 1:
Đề bài
Direct material £4,000
Direct labor £5,000
Production overhead £5,000
Fixed cost £2,000
Variable cost £3,000
Selling price of bicycle £200
Unit of bike 100

Variable cost per bike

Direct material £40 [£4,000/100]
Direct labor £50 [£5,000/100]
Production overhead £30 [£3,000/100]
Marginal cost per bike £120 [£40 + £50 + £30]
Absorption cost per bike
Direct material £4,000
Direct labor £5,000
Production overhead £5,000
Total cost £14,000 [£4,000 + £5,000 +£5,000]
Absorption cost per bike £140 [£14,000/100]

Contribution per bike

Selling price of bicycle £200
Variable cost per bike £120
Contribution per bike £80 [£200 – £120]

Marginal costing statement

Sale revenue £20,000

Variable cost £12,000 [£4,000 + £5,000 + £3,000]
Direct material £4,000
Direct labor £5,000
Production overhead £3,000
Total contribution £8,000 [£20,000 – £12,000]
Fixed cost £2,000
Production overhead £2,000
Profit £6,000 [£8,000 - £2,000]

Absorption costing statement

Sale revenue £20,000

 Total cost £14,000 [£4,000 + £5,000 +£5,000]
Direct material £4,000
Direct labor £5,000
Production overhead £5,000
Profit £6,000 [£20,000 – £14,000]

Marginal Costing Absorption Costing

Income statement
Sales £20,000 £20,000
Less COGS £12,000 £14,000
Gross Profit £8,000 [£20,000 – £12,000] £6,000 [£20,000 – £14,000]
Less Expense £2,000
Net profit £6,000 [£20,000 – £12,000 – £2,000] £6,000 [£20,000 – £14,000]

Exercise 2:
Đề bài
January February
Price per unit £20 £20
Sales units 2,300 2,200
Production unit 2,800 2,500
Fixed manufacturing cost £1,800 £1,800
Variable manufacturing cost £5,750 £5,500
Fixed marketing cost £1,000 £1,000
Variable marketing cost £2,300 £2,200

Marginal costing statement

January February
Sale revenue £46,000 [£2,300 x 20] £44,000 [£2,200 x 20]
Variable cost £8,050 [£5,750 + £2,300] £7,700 [£5,550 + £2,200]
Variable manufacturing
cost £5,750 £5,500
Variable marketing cost £2,300 £2,200
Total contribution £37,950 [£46,000 – £8,050] £36,300 [£44,000 – £7,700]
Fixed cost £2,800 [£1,800 + £1,000] £2,800 [£1,800 + £1,000]
Fixed manufacturing cost £1,800 £1,800
Fixed marketing cost £1,000 £1,000
Profit £35,150 [£37,950 - £2,800] £33,500

Absorption costing statement

January February
Sale revenue £46,000 £44,000
Total cost £10,850 [£7,550 + £3,300] £10,500 [£7,300 + £3,200]
Manufacturing cost £7,550 [£1,800 + £5,750] £7,300 [£1,800 + £5,550]
Marketing cost £3,300 [£1,000 + £2,300] £3,200 [£1,000 + £2,200]
Profit £35,150 [£46,000 - £10,850] £33,500 [£44,000 - £10,500]

Marginal Costing Absorption Costing

January February January February
Income statement
Sales £46,000 £44,000 £46,000 £44,000
Less COGS £8,050 £7,700 £10,850 £10,500
Gross Profit [Sales –
COGS] £37,950 £36,300 £35,150 £33,500
£2,800 [£1,800 £2,800 [£1,800
Less Expenses + £1,000] + £1,000]
Fixed manufacturing cost £1,800 £1,800
Fixed marketing cost £1,000 £1,000
£35,150 £33,500 £35,150 £33,500
[£37,950 - [£36,300 - [£46,000 - [£44,000 -
Total profit £2,800] £2,800] £35,150] £10,500]

Exercise 3:
Sales units 5,000
Production unit 4,500
Selling price £110 per chair
Direct material £30 per chair
Direct labor £40 per chair
Fixed production overhead £100,000

Marginal costing statement

Sale revenue £550,000 [£110 x 5,000]

Variable cost £350,000
Direct material £150,000 [£30 x 5,000]
Direct labor £200,000 [£40 x 5,000]
Total contribution £200,000 [£550,000 - £350,000]
Fixed cost £100,000
Fixed production overhead £100,000
Profit £100,000 [£200,000 - £100,000]

Absorption costing statement

Sale revenue £550,000

Total cost £450,000 [£150,000 + £200,000 + £100,000]
 Direct material £150,000
Direct labor £200,000
Fixed production overhead £100,000
Profit £100,000 [£550,000 - £450,000]

Cash budget exercise Week 9

Exercise 1:
May June July August
Material
purchases £18,000 £15,000 £22,000 £25,000
Wages £12,000 £10,000 £15,000 £20,000

Rental income £2,000 per month

Redecoration cost £2,000 August
Purchases are paid after 1 month
Cash balance £5,000 June
Wages bonus £3,000 July

June July August

Sales £35,000 £45,000 £62,000
Rent received £2,000 £2,000 £2,000
Total receipts [Sales + Rent received] £37,000 £47,000 £64,000
Purchases £18,000 £15,000 £22,000
Wages £10,000 £18,000 £20,000
Redecoration costs £0 £0 £2,000
Gas and electricity £3,500 £4,000 £4,200
New machinery £0 £0 £32,600
Total payments [Purchases + Wages +
Redecoration costs + Gas and electricity + £31,500 £37,000 £80,800
New machinery]
Surplus/(Deficit) for the month [Total
£5,500 £10,000 -£16,800
receipts - Total payments]
Opening balance £5,000 £10,500 £20,500
Closing balance [Surplus/(Deficit) for the
£10,500 £20,500 £3,700
month + Opening balance]

Cash budget revision exercise Week 9

Cast budget May June July August September October November December
Sales 57 55 59 61 64 59 55 58
Cost of sales 34 35 35 36 38 35 33 32
Salaries 12 12 12 12 12 12 12 12
Electricity 3 3 3 3 4 5 6 7
Depreciation 4 4 4 4 4 4 4 4
Total cost 53 54 54 55 58 56 55 55
Net profit 4 1 5 6 6 3 0 3
Cash budget revision exercise Week 9

Cast budget May June July August September October November December
Receivables: 50% 28.5 27.5 29.5 30.5 32 29.5 27.5 29
Receivables: 40% 22.8 22 23.6 24.4 25.6 23.6 22
Total receipts [Receivables: 50% +
Receivables: 40%] 51.5 54.1 56.4 55.1 51.1 51
Payments
Purchases: 1 month after purchase 35 36 38 35 33 32
Salaries 12 12 12 12
Electricity 9 12
Plant & equipment 24
Dividend paid 8
Tax paid 13
Total payments [Purchases + Salaries +
Electricity + Plant & equipment +
Dividend paid + Tax paid] 65 74 60 57
Surplus/(deficit) for the month [Total –
receipts – Total payments] (13.5) (19.9) (3.6) (1.9)
Opening balance 4.5 (9) (28.9) (32.5)
Closing balance [Surplus/(deficit) for the
month + Opening balance] (9) (28.9) (32.5) (34.4)
Cash budget revision exercise Week 9

Exercise 2:
Month Sales on credit (units) Production (units) Selling price per product £14
November 1,000 1,200 Material per product £5
December 1,200 1,400 Labor per product £2.50
January 1,400 1,600 Variable overhead per product £1.50
February 1,600 2,000 Fixed cost £1,500
March 1,800 2,200 Bank balance in November £4,500

- 20% paid in the month of sale [20% trả ngay]

- 50% paid in next month [50% trả sau 1 tháng]
- 25% paid in the next two months after sale [25% trả sau 2 tháng]

- 70% of variable overhead paid in the month of production [70% chi phí thay đổi trả ngay trong tháng sản xuất]
- 30% paid next month [30% trả tháng sau]
November December January February March
Cash receipts [Receivable 20% + Receivable
50% + Receivable 25%] £2,800 £10,360 £15,820 £18,480 £21,140
Receivable 20% [Month sales on credit (units)
x £14 x 20%] £2,800 £3,360 £3,920 £4,480 £5,040
Receivable 50% [Month sales on credit (units)
x £14 x 50%] £7,000 £8,400 £9,800 £11,200
Receivable 25% [Month sales on credit (units)
x £14 x 25%] £3,500 £4,200 £4,900
Cash payment expenses [Fixed cost +
Variable cost] £11,760 £14,010 £15,810 £19,320 £21,210
Fixed cost £1,500 £1,500 £1,500 £1,500 £1,500
Variable cost [Material + Labor + Overhead] £10,260 £12,510 £14,310 £17,820 £19,710
Material [£5 x Month production (units)] £6,000 £7,000 £8,000 £10,000 £11,000
Labor [£2.50 x Month production (units)] £3,000 £3,500 £4,000 £5,000 £5,500
Overhead [Receivable 70% + Receivable 30%] £1,260 £2,010 £2,310 £2,820 £3,210
Receivable 70% [£1.50 x Month production
(units) x 70%] £1,260 £1,470 £1,680 £2,100 £2,310
Receivable 30% [£1.50 x Month production
(units) x 30%] £540 £630 £720 £900
Net cash inflow [Cash receipts - Cash
payment expenses] (£8,960) (£3,650) £10 (£840) (£70)
Opening cash balance £4,500 (£4,460) (£8,110) (£8,100) (£8,940)
Closing cash balance [Net cash inflow +
Opening cash balance] (£4,460) (£8,110) (£8,100) (£8,940) (£9,010)
Exercise Week 11
Question 1
Đề bài Before After
Selling price per unit $20 $22 [$20 x 20%]
Variable cost per unit $12 $11.40 [$12 – ($12 x 5%)]
Fixed cost $50,000 $50,000

1a)
Contribution per unit $8 [$20 – $12] $10.60 [$22 – $11.40]
Break-even point 6,250 [$50,000/$8] 4,717 [$50,000/$10.60]

1b) What is the impact of the proposed changes on the company’s profitability? [Tác động
của những thay đổi được đề xuất đối với lợi nhuận của công ty là gì?]

The proposed changes will increase the contribution per unit by $2.60 ($10.60 - $8) and
reduce the break-event point by 1,533 units (6,250 – 4,717). This means that the company
will need to sell fewer units to cover its fixed costs and will make more profit on each unit
sold. [Những thay đổi được đề xuất sẽ tăng khoản đóng góp trên mỗi đơn vị thêm $2,60
($10.60 - $8) và điểm hoà vốn xuống 1,533 sản phẩm (6,250 – 4,717). Điều này có nghĩa là
công ty sẽ cần bán ít sản phẩm hơn để trang trải chi phí cố định và sẽ kiếm được nhiều lợi
nhuận hơn trên mỗi đơn vị được bán]

Question 2

Đề bài
Selling price per unit $30
Variable cost per unit $18
Fixed cost $60,000
Special price per unit $25
Total special unit product 2,000

2a) Using contribution analysis

Contribution per unit for regular sales $12 [$30 – $18]
Contribution per unit for special order $7 [$25 – $18]
Total contribution from special order $14,000 [$7 x 2,000]

2b) Should ABC company accepts the special order? [Công ty ABC có nên chấp nhận đơn đặt
hàng đặc biệt không?]
Since the contribution from the special order is positive, ABC company should accept the
special order. The additional of $14,000 will help to cover the fixed costs and increase the
company’s profitability [Vì đóng góp từ đơn đặt hàng đặc biệt là tích cực, công ty ABC nên
chấp nhận đơn đặt hàng đặc biệt. Khoản bổ sung $14,000 sẽ giúp trang trải các chi phí cố
định và tăng khả năng sinh lời của công ty]
 Question 3
Month Sales Purchases Wages Rent

January 10,000 6,000 2,000 1,000

February 12,000 7,000 2,000 1,000
March 14,000 8,000 2,000 1,000
April 16,000 9,000 2,000 1,000
May 18,000 10,000 2,000 1,000
June 20,000 11,000 2,000 1,000

January February March April May June

Cash inflows (Sales) 10,000 12,000 14,000 16,000 18,000 20,000
Purchases 6,000 7,000 8,000 9,000 10,000 11,000
Cash payment expenses [Wages + Rent] 3,000 3,000 3,000 3,000 3,000 3,000
Wages 2,000 2,000 2,000 2,000 2,000 2,000
Rent 1,000 1,000 1,000 1,000 1,000 1,000
Cash outflows [Purchases + Expenses] 9,000 10,000 11,000 12,000 13,000 14,000
Net cash flow [Cash inflows – Cash outflows] 1,000 2,000 3,000 4,000 5,000 6,000
Opening balance 5,000 6,000 8,000 11,000 15,000 20,000
Closing cash balance [Net cash flow +
Opening balance] 6,000 8,000 11,000 15,000 20,000 26,000