Professional Documents
Culture Documents
Introduction
Total Per Unit Percentage
Sales (400 speakers) ₱ 100,000.00 ₱ 250.00
Variable Expenses ₱ 60,000.00 ₱ 150.00 60% VE Ratio
Contribution Margin ₱ 40,000.00 ₱ 100.00 40% CM Ratio
Fixed Expenses ₱ 35,000.00
Net Operating Income ₱ 5,000.00
Fixed Cost & Sales Vol. Total Per Unit Add. Adv. Budg. Difference
Sales (400 speakers) ₱ 100,000.00 ₱ 250.00 ₱ 130,000.00 ₱ 30,000.00
Variable Expenses ₱ 60,000.00 ₱ 150.00 ₱ 78,000.00 ₱ 18,000.00
Contribution Margin ₱ 40,000.00 ₱ 100.00 ₱ 52,000.00 ₱ 12,000.00
Fixed Expenses ₱ 35,000.00 ₱ 45,000.00 ₱ 10,000.00
Net Operating Income ₱ 5,000.00 ₱ 2,000.00
Decision: YES
Var Cost & Sales Vol. Total Per Unit New per Unit New Difference
Sales (400 speakers) ₱ 100,000.00 ₱ 250.00 ₱ 250.00 ₱ 120,000.00 ₱ 20,000.00
Variable Expenses ₱ 60,000.00 ₱ 150.00 ₱ 160.00 ₱ 76,800.00 ₱ 16,800.00
Contribution Margin ₱ 40,000.00 ₱ 100.00 ₱ 90.00 ₱ 43,200.00 ₱ 3,200.00
Fixed Expenses ₱ 35,000.00 ₱ 35,000.00 ₱ -
Net Operating Income ₱ 5,000.00 ₱ 8,200.00 ₱ 3,200.00
Decision: YES
Fxd Cost, SP, & Sale Vol Total Per Unit New per Unit New Difference
Sales (400 speakers) ₱ 100,000.00 ₱ 250.00 ₱ 230.00 ₱ 138,000.00 ₱ 38,000.00
Variable Expenses ₱ 60,000.00 ₱ 150.00 ₱ 150.00 ₱ 90,000.00 ₱ 30,000.00
Contribution Margin ₱ 40,000.00 ₱ 100.00 ₱ 80.00 ₱ 48,000.00 ₱ 8,000.00
Fixed Expenses ₱ 35,000.00 ₱ 50,000.00 ₱ 15,000.00
Net Operating Income ₱ 5,000.00 -₱ 2,000.00 -₱ 7,000.00
Decision: NO
Var Cost, Fxd Cost, & Sale Vol Total Per Unit New per Unit New Difference
Sales (400 speakers) ₱ 100,000.00 ₱ 250.00 ₱ 230.00 ₱ 138,000.00 ₱ 38,000.00
Variable Expenses ₱ 60,000.00 ₱ 150.00 ₱ 150.00 ₱ 90,000.00 ₱ 30,000.00
Contribution Margin ₱ 40,000.00 ₱ 100.00 ₱ 80.00 ₱ 48,000.00 ₱ 8,000.00
Fixed Expenses ₱ 35,000.00 ₱ 50,000.00 ₱ 15,000.00
Net Operating Income ₱ 5,000.00 -₱ 2,000.00 -₱ 7,000.00
Decision: NO
Margin of Safety
₱ 400.00
STANDARD Total Per Unit Percentage
Sales (400 speakers) ₱ 100,000.00 ₱ 250.00
Variable Expenses ₱ 60,000.00 ₱ 150.00 60% VE Ratio
Contribution Margin ₱ 40,000.00 ₱ 100.00 40% CM Ratio
Fixed Expenses ₱ 35,000.00
Net Operating Income ₱ 5,000.00
Sales ₱ 100,000.00
Break Even ₱ 87,500.00
Margin of Safety ₱ 12,500.00 Excess of sales over break-even
Margin of Safety 12.5% Portion of sales above break-even
40% NOI /MOS
Higher margin of safety, the better
Operating Leverage
₱ 400.00
STANDARD Total Per Unit Percentage
Sales (400 speakers) ₱ 100,000.00 ₱ 250.00
Variable Expenses ₱ 60,000.00 ₱ 150.00 60% VE Ratio
Contribution Margin ₱ 40,000.00 ₱ 100.00 40% CM Ratio
Fixed Expenses ₱ 35,000.00
Net Operating Income ₱ 5,000.00
DOL ₱ 8.00
Every 1% of revenue increase, profits increase by 8% because of the degree of operating leverage
Quick Check
Demand ₱ 2,100.00
SP ₱ 1.49
VC ₱ 0.36
CM ₱ 1.13
FC ₱ 1,300.00
Table
A B
SP ₱ 300.00 ₱ 300.00
VC ₱ 120.00 ₱ 220.00
CM ₱ 180.00 ₱ 80.00
FX ₱ 250,000.00 ₱ 100,000.00
300 A B
Revenue ₱ 90,000.00 ₱ 90,000.00
Variable Exp ₱ 36,000.00 ₱ 66,000.00
CM ₱ 54,000.00 ₱ 24,000.00
Fixed Exp ₱ 250,000.00 ₱ 100,000.00
Net Op Inc. -₱ 196,000.00 -₱ 76,000.00
DOL -₱ 0.28 -₱ 0.32
BE P 1389 1250
X Y
June 850 ₱ 9,800.00
Feb 450 ₱ 7,400.00
Difference ₱ 400.00 ₱ 2,400.00
b ₱ 6.00
a ₱ 4,700.00
Y = 4700 + 6X
Concept Check
A 120000 ₱ 14,000.00
B 80000 ₱ 10,000.00
Difference ₱ 40,000.00 ₱ 4,000.00
b ₱ 0.10
a ₱ 2,000.00
Y = 2,000 + .1X
E5-12
High Dynamic Sure Shot Total
Sales ₱ 150,000.00 ₱ 250,000.00 ₱400,000.00
CM Ratio 80% 36% 53%
Fixed Exp ₱ 183,750.00
E5-14
SP ₱ 40.00
CM ₱ 0.30
Fxd Exp ₱ 180,000.00
Demand ₱ 16,000.00
SP ₱ 40.00
CM ₱ 0.30
Fxd Exp ₱ 180,000.00
Demand ₱ 16,000.00
E5-17
SP ₱ 50.00
VC ₱ 32.00 ₱ 0.64
CM ₱ 18.00 ₱ 0.36
Fix Exp ₱ 108,000.00
SP ₱ 50.00 ₱ 45.00
VC ₱ 32.00 ₱ 0.64 ₱ 32.00 ₱ 0.71
CM ₱ 18.00 ₱ 0.36 ₱ 13.00 ₱ 0.29
Fix Exp ₱ 108,000.00
Demand ₱ 8,000.00
E5-21
Budgeted Total White Fragrant Loonzain
Sales ₱ 750,000.00 ₱ 150,000.00 ₱390,000.00 ₱ 210,000.00
Variable Expenses ₱ 270,000.00 ₱ 108,000.00 ₱ 78,000.00 ₱ 84,000.00
Contribution Margin ₱ 480,000.00 ₱ 42,000.00 ₱312,000.00 ₱ 126,000.00
Fixed Expenses ₱ 449,280.00
Net Operating Inc. ₱ 30,720.00
Break Even (Dollars) ₱ 702,000.00
E5-23
SP ₱ 20.00
VC ₱ 8.00
FX ₱ 180,000.00
Sales ₱ 400,000.00
VC ₱ 160,000.00 40%
CM ₱ 240,000.00 60%
FE ₱ 180,000.00
NOI ₱ 60,000.00
BEP ₱ 300,000.00
DOL ₱ 4.00
% inc in sales 19%
% inc in profit 75%
60% 1. CM Ratio
₱ 300,000.00 2. BEP
75% 3. Inc in profit
₱ 4.00 4. DOL
80% 5. % inc in profit, 20% inc in sales
Yes 6. Recommendation
SP ₱ 18.00 FX ₱ 180,000.00
VC ₱ 8.00
CM ₱ 10.00
Units 20000 25000
Sales ₱ 450,000.00
VC ₱ 160,000.00 36%
CM ₱ 290,000.00 64%
FE ₱ 210,000.00
NOI ₱ 80,000.00
BEP ₱ 325,862.07
DOL ₱ 3.63
% inc in sales 17%
% inc in profit 60%
E5A-3
Usage ₱ 105,000.00 ₱ 70,000.00
Cost/Km ₱ 11.40 ₱ 13.40
Total Cost ₱ 1,197,000.00 ₱ 938,000.00
X Y
High ₱ 105,000.00 ₱ 1,197,000.00
Low ₱ 70,000.00 ₱ 938,000.00
Difference ₱ 35,000.00 ₱ 259,000.00
b ₱ 7.40
a ₱ 420,000.00
Y = 420000 + 7.4X
E5A-7
July August September Classification
Sales in Units ₱ 4,000.00 ₱ 4,500.00 ₱ 5,000.00
E5A-8
Month Machine-Hours TOC
April ₱ 70,000.00 ₱ 198,000.00
May ₱ 60,000.00 ₱ 174,000.00 Low
June ₱ 80,000.00 ₱ 222,000.00
July ₱ 90,000.00 ₱ 246,000.00 High
Y = 30000 + 2.4X
Variable
Fixed
Mixed
Mixed
Fixed
Fixed
Mixed
VC & Segment Reporting
Example Per Unit Per Month
Selling Price ₱ 100,000.00
Direct Materials ₱ 19,000.00
Direct Labor ₱ 5,000.00
VMO ₱ 1,000.00
FMO ₱ 70,000.00
VS&A Exp ₱ 10,000.00
FS&A Exp ₱ 20,000.00
E6-1
Units BG Inv 0 Variable Costing ₱ 480.00
Units Prod 250 Absorption Costing ₱ 700.00
Units Sold 225
Units End Inv 25
DM ₱ 100.00
DL ₱ 320.00
VMO ₱ 40.00
V S&A Exp ₱ 20.00
E6-2
Sales ₱ 191,250.00 Sales ₱191,250.00
COGS ₱ 157,500.00 COGS ₱108,000.00
Gross Margin ₱ 33,750.00 CM ₱ 83,250.00
Selling & Admin Exp ₱ 24,500.00 Fixed Exp ₱ 80,000.00
Net Operating Income ₱ 9,250.00 Net Operating Inc ₱ 3,250.00
E6-21
Sales ₱ 750,000.00
Variable Expenses ₱ 336,000.00
Contribution Margin ₱ 414,000.00
Fixed Expenses ₱ 378,000.00
Net Operating Income ₱ 36,000.00
Total North South
Sales ₱ 750,000.00 ₱300,000.00 ₱ 450,000.00
Variable Expenses ₱ 336,000.00 ₱156,000.00 ₱ 180,000.00
Contribution Margin ₱ 414,000.00 ₱144,000.00 ₱ 270,000.00
Traceable Fixed Expenses ₱ 228,000.00 ₱120,000.00 ₱ 108,000.00
Segment Division Margin ₱ 186,000.00 ₱ 24,000.00 ₱ 162,000.00
Common Expenses ₱ 150,000.00
Net Operating Income ₱ 36,000.00
E7-25 Y1 Y2 Y3
Sales ₱ 800,000.00 ₱640,000.00 ₱ 800,000.00 ₱ 16.00 ₱ 16.00 ₱ 16.00
COGS ₱ 580,000.00 ₱400,000.00 ₱ 620,000.00 ₱ 11.60 ₱ 10.00 ₱ 12.40
Gross Margin ₱ 220,000.00 ₱240,000.00 ₱ 180,000.00 ₱ 4.40 ₱ 6.00 ₱ 3.60
S & A Exp ₱ 190,000.00 ₱180,000.00 ₱ 190,000.00 ₱ 3.80 ₱ 4.50 ₱ 3.80
Net Op Inc/Loss ₱ 30,000.00 ₱ 60,000.00 -₱ 10,000.00 ₱ 0.60 ₱ 1.50 -₱ 0.20