You are on page 1of 15

COST-VOLUME-PROFIT

ANALYSIS OF ASUS’S
PDA PHONE SEGMENT
Prepared by:

TAUHID MUNTAKIM
ID# 042-18-440
MOHAMMAD KHAIRUL HASAN
ID # 042-18-440
JAKIR HOSSAIN
ID # 042-18-485
What is CVP?

Cost-volume-profit (CVP) analysis is


the study of the effects of changes in
costs and volume on a company’s
profits.
Assumptions of CVP Analysis:

■ Fixed costs remain fixed.

■ All units produced are selling out and selling


price is same per unit.

■ Changes in activity are the only factors that


affect costs.
CVP analysis considers the interrelationships
among the components:

■ Volume or level of activity.


■ Unit selling prices.
■ Variable cost per unit.
■ Total fixed costs.
■ Sales Mix.
Contribution Margin:

■ Contribution margin is the amount of revenue


remaining after deducting variable costs.

Formula for contribution margin:

C.M. = Sales – Variable Costs


Margin of Safety:

■ The planned unit sells less the break-even


unit sales. It shows how far sales can fall
below the planned level before losses occur.

Formula for Margin of Safety :

Margin of safety = planned unit sales – break-


even unit sales
Break-Even Analysis:

The level of activity at which


total revenues equal total costs (both
fixed and variable) is call break-
even point. The process of finding
the break-even point is call break-
even analysis.
■ Break-even Volume in units:
Fixed Expenses
Unit contribution margin

■ Break-even volume in dollar:

Fixed expenses
Contribution margin ratio
Target net profit and an incremental
approach:

Fixed expenses + Target net Income

Unit contribution margin


Example:
ASUS BANGLADESH SALES
CENTRE:

■ PDA Phone : Price = $ 499

■ PDA Phone without camera: Price=$200


Break-even point in number of set (3 PDA
Phone without camera 2 PDA Phone)

= Fixed Cost
Total C.M.

= $500000
$ 557

= $ 898 set
$898 * $3 = $1794 No. of PDA
at break-even point

$898 * $2 = $1796 number of


PDA without camera at BEP
Miss Shagufta Islam sale for
the year was 3,000 PDA
Phone and 2,300 PDA Phone
without camera.
MISS SHAGUFTA ISLAM’S
Income Statement
For the year ended in June 31, 2007

Sales (3000 PDA & 2,300 PDA without camera) $ 19, 57,000
Less: variable cost ($260 per PDA Phone & $ 9, 16,000
$ 120 per PDA Phone without camera)

Contribution Margin $ 10, 41,000


Less: Fixed costs $ 5, 00,000

Net Income $ 5, 41,000

You might also like