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Chapter I

THE PROBLEM AND ITS BACKGROUND

Introduction

Cost – Volume – Profit (CVP) analysis is used to determine how changes

in costs and volume affect a company's operating income and net income. In

performing this analysis, there are several assumptions made, including the

sales price per unit, variable costs per unit and the total fixed costs that are

constant then, everything produced is assumed to be sold. Costs are only

affected because activity changes. CVP analysis requires that all of the

company's costs, including manufacturing, selling, and administrative costs must

be identified as variable or fixed.

CVP analysis also administers product contribution margin. Contribution

margin is the difference between total sales and total variable costs. For a

business to be profitable, the contribution margin must exceed total fixed costs.

The contribution margin may also be calculated per unit. The unit contribution

margin is simply the unit variable cost subtracted from the unit sales price. The

contribution margin ratio is determined by dividing the contribution margin by total

sales.

In terms of profit planning, CVP analysis provides managers with the

advantage of being able to answer specific pragmatic questions needed in

business analysis. Questions such as what the company's breakeven point help

managers project how future spending and production will contribute to the
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success or failure of the company. For instance, when a manager knows the

breakeven point, he can tweak spending and increase production efforts to

increase profitability. Because CVP analysis is based on statistical models,

decisions can be broken down into probabilities that help with the decision –

making process.

Moreover, the cost – volume – profit analysis is used by the managers to

plan and control more effectively and also to concentrate on the relationship

among revenues, cost, volume changes, taxes and profit. It is also known as

break – even analysis where revenue is equal to the costs associated. Finally,

this study is aimed at examining the effect of cost – volume – profit analysis on

the profit planning process of selected manufacturing industries in Laguna.

In order to assist the profit planning of manufacturing industries in cost –

volume – profit analysis control, the CVP analysis system must first of all indicate

what is attainable by efficient performance and then highlight any area where

attainable efficiency is not being achieved. The definition of cost – volume – profit

analysis as per the institute of chartered accountants official terminology is “a

predetermined calculation of how much cost should be under specific working

conditions in manufacturing industries”. It is built up from an assessment of the

value of cost element and correlates technical specifications and the

quantification of materials, labor and other costs to prices and/or wages expected

to apply during the period which the cost – volume – profit analysis is expected to

be used.
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Background of the Study

Cost – Volume – Profit analysis is one of the most important concepts in

managerial accounting. It is frequently used in making effective and efficient

managerial decisions with the use of different tools and techniques. With the help

of CVP analysis, the most profitable combination of variable cost, fixed cost,

selling price and sales volume can be established. It can help companies

determine their contribution margin, which is the amount remaining from sales

revenue after all the variable expenses have been deducted. The amount that

remains is first used to cover fixed costs, and whatever remains afterward is

considered as profit.

With regards to the profit planning, CVP analysis is a valuable tool for

managers and accountants of a certain entity. It can provide a simple system of

calculations that managers or accountants use to estimate the financial effects of

a broad range of decisions. In doing so, CVP analysis compares the relationship

between costs of producing goods, volume of goods sold and profits. Managers

continually use CVP analysis to estimate the level of sales that will allow the

company to make a particular profit, called the targeted income. If the level of

sales is not enough to cover the costs incurred, they can think of a way of

reducing their costs or increasing the sales volume they will produce to attain the

desired profit.

In all business enterprise, the implementation of cost – volume – profit

analysis is very significant and can effect on the decision of the managers.
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However, this analysis is a tool used by managers of business organization or

manufacturing firms in making sure that proper decisions are made in order to

achieve the targeted goals or objective of such business.

Hence, all manufacturing industries have to determine whether their firms

is maximizing profit or freezing out of the market. A well – organized industry

should have an effective costing system so that proper costing of its material,

labor and overhead can be easily effected, so as to determine the actual cost of

production based on the analysis carried out using CVP analysis.

For business industries, profit maximization must be governed; cost

should be cut from time to time. Oftentimes, the difficult work of profit planning is

a periodic program rather than an ongoing way of life. Almost all of the business

wants to increase their profit so in line with this, researchers want to know if the

practices under CVP analysis would help to attain this goal. Especially with these

days wherein there are increase in the cost of raw materials that result in the

increase in the cost of production and leads to the high prices of the products.

This study is focused on the effect of using CVP analysis on the profit

planning of selected manufacturing companies in Laguna.

Literature Review

According to Roque (2016), one of the analytical tools that managers can

use in profit planning is CVP analysis, which is a systematic examination of the

relationships among costs, activity levels or volume and profit. It is agreed by

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Cabrera (2015) and Agamata (2014) that CVP analysis has a great impact on

management‟s decision and is used on the profit setting of different entities.

In conformity with Ihemeje (2015), the inadequate application of the cost –

volume – profit analysis in the manufacturing industries had lead to purposeless

effect in the decision making process in the said industries. CVP analysis is a

commonly used tool useful in the management in providing information for

decision making that will be employed in making vital decision when a

manufacturing firm faced with managerial problems which includes cost, volume

and the product implication.

In the hotel industry, management accounting practices are applied to

determine the specifics of the hotel product and the needs to be addressed from

the point of view of management accounting and relevant data collection. As

agreed by Georgiev (2015), CVP analysis is one of the most common tools used

by hotel organizations to submit high utility data, as part of a number of effective

management accounting methods applied to the said industry. Similarly, Briciu

(2016), states that CVP model is an essential instrument in the decision making

process of the management that can help in the production decisions, selling,

and etc.

Koebel (2013), cited that in the manufacturing industries 20% to 60% of

the total costs are fixed costs that tend to decline over time. These costs affect

behavior from price setting and returns to scale. Industries with higher fixed costs

and lower variable costs have higher returns to scale and markups. The classical

Translog cost allows for interactions between the fixed and variable costs.
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According to Ameyaw (2016), not all cost maintains same relationship with

volume of production over entire production period and volume range. Due to the

frequent change in prices of goods and services, it is possible that fixed cost

could change twice or thrice in production year not following the underlying

assumptions of CVP analysis that fixed cost may not change over time.

Nevertheless, fixed cost such as electricity and transportation costs could be cut

down to increase the profit margin. If the manager wants to cut down fixed costs

then it is a much focused area to look at.

As mentioned by Marjanovic (2013), the concept of CVP analysis relies

mainly on information of calculation on the variable costs, deriving quantitative

data on costs and revenues mainly from financial accounting. CVP analysis and

break – even point has been known to theorists even before the onset of

calculation on the variable costs. However, with the emergence of calculation on

the variable costs a solid information base has been created for its application in

the field of short term business decision making. Naturally the very accounting

methodology on the variable costs is based on theoretical assumptions about the

behavior of the short – term costs within the relevant range of activity volume and

share of total costs into the fixed and variable component.

Marjanovic (2013), added that the division of costs into the fixed and

variable component is often made difficult because of the well – known problem

of choice of base of activities about which the paper discusses among other

issues. The choice of base of activities and methodologies for separating mixed

costs into fixed and variable components constitute a single body of initial
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problems affecting validity of the information obtained.

According to Budugan (2008), CVP analysis is useful since it offers an

overall image of the company management. For forecasting purposes,

management may use CVP analysis to calculate the profit yield by a given

amount of sold goods. Or, based on the CVP analysis, the management may set

the necessary sales level to earn the desired profit. Moreover, CVP analysis is

increasingly used in the budgeting process. CVP analysis may be used also in

separating fixed and variable costs that help in gathering relevant costs, related

information useful in short – term decision – making, such as, for instance, profit

estimate for the following time interval.

Similarly, Alleyne (2011), management accounting practices specifically

the CVP analysis enable management to obtain relevant information for

meaningful decision making. Management accounting practices were very

effective and contributed to the success of the entities, consistent and

standardized.

Dalci (2015), stated that the activity – based CVP analysis provides better

prediction of costs and much more complete picture of break – even analysis.

CVP analysis produces organizational benefits such as improving cost

management and helps in the process of decision – making.

Furthermore, Enkeleda (2018), stated that benefits derived from

application of this analysis include effective cost control, high production, service

capacity, and increased profitability. Also, applying CVP analysis during the

decision – making process increases management efficiency to a large extent.

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According to Younis (2012), CVP analysis is an often overlooked financial

measurement tool however it may be used also in health care centers and

provides benefits therein. Health care administrators and managers must know

all aspects of providing care to patients, not simply measured by health

outcomes. The use of CVP analysis for hospital unit gives benefits that it is

necessary on allowing hospital managers to discern any probable effects of

changes in price, product mix, or sales volume.

Enkeleda (2018), stated that production and service enterprises pay

particular attention to CVP analysis during the planning process based on the

previous years. Profit planning assists in finding the most profitable combination

between selling price, cost and volume, and hence it enables calculations of

profit at different sales levels. It assumes that sales volume is the primary cost

driver. Therefore, managers need to take measures to increase profits by

reducing costs, especially variable costs per unit, which vary with the level of

activity. It is an important tool in short – term profit planning in an organization,

especially in assessing margin of safety.

A high level of cost information for profit planning was being used by

manufacturing organizations as stated by Adesina (2015). Management is likely

to meet their profit target as only profitable project are likely to be undertaken and

they are aware of what to expect during the period. However, management may

be prone to decision error by not considering the effect of deleting a project

considered not profitable on the demand for other products and the overall

profitability of the company. It was also observed that the use of sales budget for
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performance evaluation and quarterly review of sales budget was frequently

practiced.

Agamata (2014), stated that the process of managing costs and sales

volume as they impact profit is known as cost – volume – profit analysis. The

profit planning is the process of anticipating profit under varying conditions and

analyzing the effects of variables affecting it. Profit planning is an effective tool

preceding CVP analysis.

According to Kelly (2010), CVP analysis may provide very useful

information particularly for a business that is commencing operations or facing

difficult economic conditions. CVP analysis assists by determining how many

units of a product must be sold so that the business „breaks even‟ total costs,

both fixed and variable are covered by total sales revenue. It allows the business

to consider the effect on profits of various changes in operating costs and

revenues such as a reduction in selling price or an increase in fixed costs; to

determine the sales volume required to achieve a specific profit level and to

establish the amount by which the current sales level can decrease before losses

are incurred.

In compliance with Salehi (2014), CVP model, based on discounted

economic benefit of the product, enables managers to determine the amount of

sales of a product at the entire point to measure the product profitability in its

selling domains. One of the reasons why traditional analysis of CVP still remains

powerful is its simplicity and its effect on the profit planning in a certain entity.
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Cabrera (2015), stated that CVP analysis serves as a basis for price

determination -- for example, in a business where a competitor sets the price of a

product at P3.50 and the business is unable to go below P5, it‟s time to review

the available options. The business can reduce the fixed cost and variable cost to

price the product at P3.50 or terminate it. In addition, CVP is helpful in price

determination because a business can establish the sensitivity of prices to the

sales volume. An increasing sales volume also means an increasing profit.

Likewise, Agamata (2014) stated that when companies are trying to

determine what levels of sales to achieve to meet their targeted profits, they use

CVP analysis. To achieve this they prepare flexible budgets that indicate the

costs and the expected revenues at various stages of production. They are also

able to understand the break – even concept, and hence they can make strategic

budgets and avoid losses where necessary

Similarly, Roque (2016), cited that the CVP model helps in evaluating the

effects of cost on changes in volume for the purpose of reviewing profits

achieved and costs incurred. For example, a company may want to purchase

new equipment to increase its production level. The new machine may increase

fixed costs. In this case, to find out the figure by which to decrease the variable

cost in order to maintain the same profit level, the company uses CVP analysis.A

deep study of the elements of cost is necessary to understand how to reduce

cost like the variable cost and fixed cost. In manufacturing industries, profit

planning is achieved through CVP analysis.

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In accordance with Ciumag (2010), through delegating authority and

assuming different responsibilities at wok activity level, on cost control is aimed

not to only to reduce those costs but also achieve this reduction at the right time,

not having gone through a long period of time and finding cost overrun for a

scheduled energy product. Calculation of expenditure to the activity level,

analysis and application of ways to continually reduce the cost provide real

opportunities for profitable participation of the establishment of material market.

Theoretical Framework

This study is supported by the theory of constraints.

The theory of constraints was published by Elihayu M. Goldratt on 1984.

The theory of constraints is a methodology for identifying the most important

limiting factor which is the constraint or the bottleneck that stands in the way of

achieving a goal and then systematically improving that blockage until it becomes

no longer a limiting factor. It takes a scientific approach to improvement; and in

manufacturing processes, it assumes that every complex system that consists of

multiple linked activities, in that entire system, the weakest link in the chain is the

constraint.

The theory of constraints provides a set of holistic processes and rules, all

based on a systems approach that exploits the inherent simplicity within complex

systems through focusing on the few leverage points as a way to synchronize the

parts to achieve ongoing improvement in the performance of system as a whole.

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In application of the Goldratt‟s Theory of Constraints in the manufacturing

industry, Luther and O‟Donovan (2010) stated that contribution maximization is

still relevant with the differences in cost that vary with output and cost that remain

constant. They modified the traditional CVP analysis and applied Goldratt‟s

Theory of Constraints. In their new approach to CVP they replaced production

volume with a constraint on the horizontal axis and termed the new approach

cost – constraint – profit analysis (CCP).

In Goldratt‟s Theory of Constraints, performance is measured by inventory

and operational expense as the throughput. A constraint is anything that limits

the volume. The capacity to generate throughput is frequently constrained by

bottlenecks. The goal of the manufacturing system is to maximize throughput per

bottleneck hour.

Profit planning and cost control is important in a manufacturing firm that is

using CCP. It is important to realize that reducing the cost for an individual unit is

not profitable unless the cost of the entire product line is reduced.
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Conceptual Framework

Independent Variable Dependent Variable

Profile of the respondents

in terms of:

 years in operation

 products produced Components of cost –

 volume of products volume – profit analysis on

produced per month the profit planning in terms

 fixed cost of:

 variable cost  sales volume

The cost – volume – profit  cost control

analysis in terms of:

 usage

 benefits

Figure 1. Research Paradigm

The figure shows the research paradigm consists of the independent

variable and the dependent variable of the whole research. The independent

variable encompasses the profile of the respondents in terms of years in

operation, products produced, volume of products produced per month, fixed

cost and variable cost; and the CVP analysis in terms of contribution usage and

benefits. The dependent variable includes the components of cost – volume –

profit analysis on the profit planning in terms of sales volume and cost control.
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Statement of the Problem

The aim of this study is to determine the effects of using the cost – volume

– profit analysis on the profit planning of selected manufacturing companies in

Laguna.

Specifically, the study sought to answer the following questions:

1. What is the profile of the respondents in terms of:

1.1. years in operation

1.2. products produced

1.3. volume of products produced per month

1.4. fixed cost

1.5. variable cost

2. What is the cost – volume – profit analysis in terms of:

2.1. usage

2.2. benefits

3. What are the components of cost – volume – profit analysis in the profit

planning in terms of:

3.1. sales volume

3.2. cost control

4. Is there a significant relationship between the profile and the profit planning of

selected manufacturing companies in Laguna in terms of:

4.1. sales volume

4.2. cost control

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5. Is there a significant relationship between cost – volume – profit analysis and

the profit planning of selected manufacturing companies in Laguna in terms

of:

5.1. sales volume

5.2. cost control

Hypotheses

1. There is no significant relationship between the profile and the profit planning

of selected manufacturing companies in Laguna in terms of sales volume and

cost control.

2. There is no significant relationship between cost – volume – profit analysis

and the profit planning of selected manufacturing companies in Laguna in

terms of sales volume and cost control.

Significance of the Study

The research is helpful in determining whether the cost – volume – profit

analysis affects the profit planning of selected manufacturing companies in

Laguna. It contributes information about the usefulness of cost – volume – profit

analysis in order to present productive income statement.

This study is also helpful to the following:

Customers. This study may give information about certain manufacturing

companies and they can know what company they‟ll prefer. They are indefinitely

be benefited by good financial planning services.

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Managers of Manufacturing Companies. This research may give them

further knowledge in managing their company and this can help for the

improvement of the establishment. It may give enhancement on the

manufacturing companies by making it manage the day to day financial tasks

productive and profitable.

Employees. Most manufacturing company require a standard group of

employees and this study may give information about better ways of doing work.

Community. This study may provide information needed by the

businesses to help them grow as constitutes helping a better nation. Although

the scope is limited, study may also apply to all business in general, small or

big, manufacturing company or not.

Students and Future Researchers. This research can help them have a

better knowledge regarding the management‟s practice in profit planning and this

study may enable them to think or give them data that they might need in order to

create a valuable study as well. They may also find useful information about any

related topics.

Scope and Limitation

This study was aimed to provide information about the relationship

between profit planning and cost – volume – profit analysis used by certain

manufacturing companies in Laguna.

The respondents were consisted of twenty – two (22) production

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supervisors, accountants or managers of selected manufacturing companies in

Laguna. The researchers provided survey questionnaires that were answered by

the respondents. This study focused on the given presumptions and data was

presented in accordance to what were gathered from the respondents.

Definition of Terms

For better understanding the following terms are operationally defined:

Benefits. Something that generates advantage or gain specifically increases the

general prosperity of the business.

Break – even Analysis. Break – even analysis entails the calculation and

examination of the margin of safety for an entity based on the revenues collected

and associated costs. Break – even analysis determines what level of sales is

needed to cover total fixed costs.

Contribution Margin. Contribution margin allows a company to determine the

profitability of individual products. It is refer to as a per unit measure of a

product's gross operating margin calculated simply as the product's price minus

its total variable costs.

Cost Accounting. Cost accounting is an accounting method that aims to capture

a company's costs of production by assessing the input costs of each step of

production as well as fixed costs. It first measures and records these costs

individually, then compare input results to output or actual results to aid company

management in measuring financial performance.

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Cost Control. This is a practice wherein the business identifies and reduces the

expenses to increase profit. When in budgeting process the actual costs are

higher than the planned this is the time that the management takes actions.

Cost Reduction. It is the process of looking for, and removing unwarranted

expenses from a business to increase profits without having a

negative impact on product quality.

Fixed Cost. Cost that does not vary on the increase or decrease of the number

of goods or services produces that needed to be paid by the company,

independent of any activity.

Managerial Accounting. Managerial accounting is the process of identifying,

measuring, analyzing, interpreting and communicating information for the

achievement of the company‟s goals and objectives.

Profit Planning. It is the process where management thinks of a way to increase

their profit, on either increasing the sales volume or minimizing costs or any other

factors.

Sales Volume. Sales volume is derived from what number of total unit of

products are sold in the market. This may also refer on the sales revenue in a

particular business.

Usage. The extent on how a particular technique or strategy is being used.

Variable Cost. Cost that increases or decreases depending on the production

volume, rise when production increases and fall when production decreases.
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Chapter II

RESEARCH METHODOLOGY

This chapter provides information about the methods of research that the

researcher used in the conduct of the study. The presentation includes research

design, research instrument, population and sampling technique, statistical tool

and research procedure which were done. The survey research method was

used to determine the relationship with the cost – volume – profit analysis and

the profit planning of selected manufacturing companies in Laguna. The survey

instrument has been designed using the Likert type of questionnaires to measure

the respondents' rating to the given statements. The data collection and data

analysis are also included in this section.

Research Design

The descriptive type of research is a study designed to depict accurately

the phenomenon being studied. Instead of answering the questions how, when or

why, it rather addresses the “what” question so the researchers can use the

descriptive research design in gathering data and verifying results. This type of

research is very applicable for the study because it attempts to describe and

explain conditions of the present by using many subjects and questionnaires to

fully describe a characteristic.

Descriptive research design was utilized by means of using survey

questionnaires which is the Likert type. The respondents answered the questions
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by means of rating scale then the researchers analyzed the relevance of their

answers.

The main purpose of the study is to determine the effect of cost – volume

– profit analysis of selected manufacturing companies in Laguna on their profit

planning.

Research Instrument

Through purposive sampling, the selection of the respondents was done.

The researchers prepared survey questionnaires for the respondents as the

research instrument that was used in this study. Survey is a no experimental and

a descriptive research method. It was useful in this study because of the fact that

the researchers collected data on the cost – volume – profit analysis and profit

planning. Likert type of questionnaire was used in assessing the respondents

wherein they rated their answers as five (5) being the highest and one (1) being

the lowest.

The researchers also gathered data from the financial statements for the

year ended 2018 for the purpose of analyzing its financial performance.

Population and Sampling Technique

The population of the study was selected on certain manufacturing

companies in Laguna. The samples of the study were composed of at least

twenty two (22) respondents.

The selected population was given questionnaires and was answered

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through rating scale to measure the significance of their answer. It was done

through random sampling.

Statistical Tool

This section enumerates and defines the equations or mathematical

operations that the researcher used to compare the figures that were used as the

basis of the conclusion of the study.

To determine the rate of the answers of the respondents, Likert Scale

method was used. This is a method of attributing qualitative value to quantitative

data, to make agreeable to statistical analysis. A numerical value was assigned

to each potential choice and a mean figure for all response was computed at the

end of evaluation or survey.

Mean was used to get the average of the gathered data which was

answered by the respondents through survey questionnaire. This formula was

helpful to analyze and interpret the ratings given by the respondents. It is also

used to determine the average perception of the respondents on the factors such

as the cost – volume – profit analysis and profit planning.

The hypotheses were tested using the Product Moment Correlation or also

known as Pearson‟s R. Pearson‟s R measures the degree to which the two

variables are related. This tool simply calculates the correlation coefficient (r)

which states how much one variable tends to change when the other one does.

When the (r) is equal to zero (0) then there is no relationship. In contrast, when

(r) is positive, there is a trend that while one variable goes with the other variable.
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This type of method is most suitable in testing whether a correlation existed

between the cost – volume – profit analysis to the profit planning of the

manufacturing companies as well as to what kind of relationship the two

variables have.

Point biserial correlation coefficient was used to know the relationship

between the profile of the respondents to the profit planning and the correlation

between the cost – volume – profit analysis and profit planning of selected

manufacturing companies in Laguna. Point biserial correlation coefficient rpbi, is a

special case of Pearson‟s Correlation Coefficient. It measures the relationship

between two variables: one continuous variable (must be ratio scale or interval

scale); and one naturally binary variable.

Research Procedure

The researchers requested for a permission letter from the Associate

Dean of the College of Business Management and Accountancy to be used for

the completion of the study. Then, the researchers constructed questionnaires

that collected the information from the respondents about their perception on the

effect of the cost – volume – profit analysis on the profit planning of various

manufacturing companies. The data was tabulated, organized and grouped

according to the results of the given answers by the respondents. Lastly, the

researchers analyzed, presented and aimed to interpret the result of the surveys

that was useful to arrive on correct conclusion.

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Chapter III

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

This chapter presents the result of statistical analysis and the

corresponding interpretation derived from the statistical treatment of data for the

study entitled “Effect of Using Cost – Volume – Profit Analysis on the Profit

Planning of Selected Manufacturing Companies in Laguna.”

I. Profile of the Respondents

4.5% 4.5%
4.5%
63.6%
22.9%
1 - 5 years

6 - 10 years

11 - 15 years

16 - 20 years

21 years and
above

Figure 2. Distribution of Respondents as to Years in Operation

Figure 2 shows the years in operations of the respondents from

manufacturing companies with the range of 1 – 5 years, 6 – 10 years, 11 –

15 years, 16 – 20 years, and 21 years and above. 4.5%, 4.5%, 4.5%, 22.9%

and 63.6% of the respondents operate at 1 – 5 years, 6 – 10 years, 11 – 15

years, 16 – 20 years, and 21 years and above respectively.

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Based on the result, it can be seen that there are more old

manufacturing companies than new ones. It indicates that most of the

respondents are good enough to maximize the sales volume and control the

costs because they are more efficient when it comes to profit planning.

36.4% 63.6%

Non - perishable goods

Perishable goods

Figure 3. Distribution of Respondents as to Type of Products Produced

Figure 3 presents the percentage distribution of the types of

products produced by the respondents. 63.6% are non – perishable goods

and the remaining 36.4% are perishable goods. This suggests that

manufacturing companies are more interested in producing non –

perishable goods because they are not likely to spoil fast unlike perishable

goods that expired easily.

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4.5% 0% 4.5%
9.2%
81.8%
1 to 3,000
3,001 to 6,000
6,001 to 9,000
9,001 to 12,000
12,001 and above

Figure 4. Distribution of Respondents as to Volume of Products Produced

per Month.

Figure 4 demonstrates the volume of products produced per month

by the respondents with the range of 1 to 3,000, 3,001 to 6,000, 6,001 to

9,000, 9,001 to 12,000 and 12,001 and above in kilograms or in liters. The

highest volume which is 81.8% comprised of respondents who produced

12,001 and above. 9.2% of the respondents produced 9,001 to 12,000 kilos

or liters of products. For both products of 6,001 to 9,000 and 1 to 3,000 kilos

or liters has 4.5% each. None of the selected respondents produced

products at a volume of 3,001 to 6,000.

Therefore, majority of the respondents have high sales volume

because they produce large unit of products.

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Table 1

Distribution of Respondents as to Amount of Fixed Cost

Fixed Cost Statistic

5% Trimmed Mean 1947272.73

Standard Deviation 1257000000

Table 1 shows the amount of fixed cost that has a trimmed mean of

1,947,272.73. The presented data detected the outliers and trimmed the

distribution of about 5% in each extremity.

In the presence of outliers data, a 5% trimmed mean was found

appropriate in determining the average fixed cost. A 1,947,272.73 fixed cost is

expected since majority of the companies that were surveyed are of small scale.

It was proved by Koebel (2013), that in the manufacturing industries 20%

to 60% of the total costs are fixed costs that tend to decline over time. These

costs affect behavior from price setting and returns to scale. Industries with

higher fixed costs and lower variable costs have higher returns to scale and

markups. Ameyaw (2016), added that not all cost maintains same relationship

with volume of production over entire production period and volume range. Due

to the frequent change in prices of goods and services, it is possible that fixed

cost could change twice or thrice in production year not following the underlying

assumptions of CVP analysis that fixed cost may not change over time.

Nevertheless, fixed cost such as electricity and transportation costs could be cut

down to increase the profit margin. If the manager wants to cut down fixed costs

then it is a much focused area to look at.

 27

Table2

Distribution of Respondents as to Amount of Variable Cost

Variable Cost Statistic

5% Trimmed Mean 3251060.61

Standard Deviation 1353000000

Table 2 illustrates the amount of variable cost that has a trimmed mean of

3,251,060.61. The presented data detected outliers and trimmed the distribution

of about 5% in each extremity.

In the presence of outliers data, a 5% trimmed mean was found

appropriate in determining the average variable cost. Majority of the companies

asked were a small entity only that‟s why the trimmed mean of variable cost is

predicted.

It was agreed by Marjanovic (2013), the concept of CVP analysis relies

mainly on information of calculation on the variable costs, deriving quantitative

data on costs and revenues mainly from financial accounting. CVP analysis and

break – even point has been known to theorists even before the onset of

calculation on the variable costs. However, with the emergence of calculation on

the variable costs a solid information base has been created for its application in

the field of short term business decision making. Naturally, the very accounting

methodology on the variable costs is based on theoretical assumptions about the

behavior of the short – term costs within the relevant range of activity volume and

share of total costs into the fixed and variable component.

 28

Table 3

Perception of the Respondents on the Usage of Cost – Volume – Profit Analysis

Standard
Usage Mean Interpretation
Deviation
The CVP Analysis was used to:
1. give emphasis on contribution margin for Strongly
the purposes of profit analysis and control. 4.50 .67
Agree
2. increase the profit growth.
4.23 .81 Agree
3. provide measurement to determine the
appropriate sales to achieve desired profit. 4.27 .99 Agree
4. provide break-even of total sales and total
cost. 3.95 .79 Agree
5. anticipate the change in income if the
manager is convinced that the reduction in
selling price would result to 3.82 .80 Agree
increase/decrease of products sold.
6. estimate required sales to yield at the
same net income as projected in the pro-
3.82 .85 Agree
forma statement.
7. calculate the magnitude of variable cost for
different volume levels. 3.91 1.02 Agree
8. attain the ultimate goal of firms which is to
maximize profit. 4.27 .88 Agree
9. segregate the fixed and variable elements
of mixed costs. 3.95 .84 Agree
10. indicate the amount of actual or planned
sales without incurring a loss. 4.05 .95 Agree
Grand Mean 4.08 .45 Agree
Legend: 4.30 – 5.00 Strongly Agree
3.50 – 4.29 Agree
2.70 – 3.49 Moderate
1.90 – 2.69 Disagree
1.00 – 1.89 Strongly Disagree

The table above shows that 4.5 is the highest mean which indicates that

CVP analysis gives emphasis on contribution margin for the purposes of profit
 29

planning and controlling costs and 3.82 is the lowest wherein CVP analysis can

help to anticipate the change in income if the manager is convinced that the

reduction in selling price would result to increase / decrease of products sold,

also it can be used to estimate required sales to yield at the same net income as

projected in the pro – forma statement.

It further shows that the extent of the respondents usage of CVP analysis

in profit planning is 4.08 which is interpreted as agree. This could mean that the

CVP analysis is moderately used to attain the objectives stated in the indicators.

According to Budugan (2008), CVP analysis is useful since it offers an

overall image of the company management. For forecasting purposes,

management may use CVP analysis to calculate the profit yield by a given

amount of sold goods. Or, based on the CVP analysis, the management may set

the necessary sales level to earn the desired profit. Moreover, CVP analysis is

increasingly used in the budgeting process. CVP analysis may be used also in

separating fixed and variable costs that help in gathering relevant costs, related

information useful in short – term decision – making, such as, for instance, profit

estimate for the following time interval.

 30

Table 4

Perception of the Respondents on the Benefits of Cost–Volume–Profit Analysis

Standard
Benefits Mean Interpretation
Deviation
1. It can anticipate profit under varying
conditions. 4.09 .811 Agree
2. It can analyze effects of variables
affecting profit planning through 4.09 1.07 Agree
forecasting.
3. Management can control costs. 4.05 1.05 Agree
4. It can control the operations to come up
with the target profit. 4.00 .87 Agree
5. It can foresee the cost and profit if
there‟s a decided new product. 4.14 .71 Agree
6. It is able to change the amount of fixed
cost if there‟s an objective of increasing 3.82 .85 Agree
the income.
7. It can calculate the indifference point
where the firm must exceed. 4.27 .83 Agree
8. It can go with the flow of cost behavior
which may happen 4.05 .90 Agree
9. It helps to identify break-even point if a
company sells one or more that 4.05 .84 Agree
product.
10. It computes the maximum increase in
sales that will lead to possible Strongly
4.32 .72
maximum profit. Agree
Grand Mean 4.09 .46 Agree
Legend: 4.30 – 5.00 Strongly Agree
3.50 – 4.29 Agree
2.70 – 3.49 Moderate
1.90 – 2.69 Disagree
1.00 – 1.89 Strongly Disagree

As shown in Table 4, the perception of the respondents as to their

awareness of the benefits derived from the use of CVP analysis in profit planning

has a grand mean of 4.09 which means they agreed with all the indicators.
 31

It proves that all the selected manufacturing companies are using CVP

analysis are mindful of the benefits they gain in using CVP analysis.

It was verified by Younis (2012), CVP analysis is an often overlooked

financial measurement tool however it may be used also in health care centers

and provides benefits therein. The use of CVP analysis for hospital unit gives

benefits that it is necessary on allowing hospital managers to discern any

probable effects of changes in price, product mix, or sales volume.

Furthermore, Dalci (2015), stated that the activity – based CVP analysis

provides better prediction of costs and much more complete picture of break –

even analysis. CVP analysis produces organizational benefits such as improving

cost management and helps in the process of decision – making.

Table 5

Component of Cost – Volume – Profit Analysis in terms of Sales Volume

Sales Volume Statistic

5% Trimmed Mean 6553030.30

Standard Deviation 479700000000

Table 5 illustrates the amount of sales volume that has a trimmed mean of

6,553,030.30. The presented data detected outliers and trimmed the distribution

of about 5% in each extremity. The amount of sales volume stated above is

found appropriate and expected because almost the respondents are small

entities only.
 32

It was confirmed by Agamata (2014), when companies are trying to

determine what levels of sales to achieve to meet their targeted profits, they use

CVP analysis. To achieve this, they prepare flexible budgets that indicate the

costs and the expected revenues at various stages of production. They are also

able to understand the break – even concept, and hence they can make strategic

budgets and avoid losses where necessary.

Table 6

Component of Cost – Volume – Profit Analysis in terms of Cost Control

Cost Control Statistic

5% Trimmed Mean 2582575.76

Standard Deviation 1353000000

Table 6 illustrates the amount of cost control that has a trimmed mean of

2,582,575.76. The presented data detected outliers and trimmed the distribution

of about 5% in each extremity. The cost control was found appropriate since

majority of the respondents are of small scale.

Ciumag (2010), ascertained that through delegating authority and

assuming different responsibilities at wok activity level, on cost control is aimed

not to only to reduce those costs but also achieve this reduction at the right time,

not having gone through a long period of time and finding cost overrun for a

scheduled energy product. Calculation of expenditure to the activity level,

analysis and application of ways to continually reduce the cost provide real

opportunities for profitable participation of the establishment of material market.

 33

Table 7

Correlation between the Profile of Respondents and Profit Planning of

Manufacturing Companies in terms of Sales Volume

Sales Volume
Profile Interpretation
r – value p – value

Years in Operation -0.48 0.02 Significant

Type of Products Produced -0.17 0.46 Not Significant
Volume of Products Produced Not Significant
0.09 0.71
per Month
Fixed Cost 1.00 0 Significant
Variable Cost 1.00 0 Significant
Legend: p<0.05 Significant
p>0.05 Not Significant

Table 7 shows the relationship between profile and profit planning of

selected manufacturing companies in Laguna in terms of sales volume. The

results showed that the computed value of test statistics in terms of years in

operation, type of products produced, volume of products produced per month

and amount of fixed cost and variable cost are equal to -0.48, -0.17, 0.09, 1.000

and 1.000 respectively while the p – value are 0.02, 0.46, 0.71, 0 and 0

respectively. Some profiles of the respondents are significant and others are not

significant. Therefore, the decision is failed to reject Ho.

The type of products produced per month is interpreted as not significant

because CVP analysis does not vary with the type of products to be produced by

a certain company since an entity producing perishable products or non –

perishable products can use the cost – volume – profit analysis and still get with
 34

the same results assuming amounts used are constant.

The volume of products produced is not significant because if there is a

low sales volume, there is also less cost associated with the volume, and if the

sales volume is high, a high cost is also expected. Thus, it is not significant with

the CVP analysis in terms of sales volume but is significant with fixed costs and

variable costs wherein these costs vary with the sales volume.

The number of years in operation is also significant because younger

companies produced more sales volume than the older companies as shown in

the amount of r – value.

Cabrera (2015), affirmed that CVP analysis serves as a basis for price

determination and a tool used in establishing amount of sales volume. The

business can reduce the fixed cost and variable cost to price the product or

terminate it. In addition, CVP analysis is helpful in price determination because a

business can establish the sensitivity of prices to the sales volume. An increasing

sales volume also means an increasing profit. Consequently, Kelly (2010), stated

that CVP analysis assists by determining how many units of a product must be

sold under the assumption that any type of products can be used so that the

business „breaks even‟ total costs, both fixed and variable are covered by total

sales revenue. It allows the business to consider the effect on profits of various

changes in operating costs and revenues such as a reduction in selling price or

an increase in fixed costs; to determine the sales volume required to achieve a

specific profit level and to establish the amount by which the current sales level

can decrease before losses are incurred.

 35

Table 8

Correlation between the Profile of Respondents and Profit Planning of

Manufacturing Companies in terms of Cost Control

Cost Control
Profile Interpretation
r – value p – value

Years in Operation -0.48 0.02 Significant

Type of Products Produced -0.17 0.46 Not Significant
Volume of Products Produced Not Significant
0.09 0.71
per Month
Fixed Cost 1.00 0 Significant
Variable Cost 1.00 0 Significant
Legend: p<0.05 Significant
p>0.05 Not Significant

Table 8 shows the relationship between profile and profit planning of

selected manufacturing companies in Laguna in terms of cost control. The results

showed that the computed value of test statistics in terms of years in operation,

type of products produced, volume of products produced per month and amount

of fixed cost and variable cost are equal to -0.48, -0.17, 0.09, 1.00 and 1.00

respectively while the p value are 0.02, 0.46, 0.71, 0 and 0 respectively.

The table presents that there is no significant relationship between type of

products produced and volume of products produce per month with the cost

control. On the other hand, the cost control was found to be significant related to

years in operation, fixed cost and variable cost.

The years in operation has a moderate negative relationship with the cost

control which implies that the younger company records higher cost control. In
 36

the case of one of these companies, they disclosed to the researchers that they

are using software to help minimize cost.

A perfect positive relationship was found between fixed cost and variable

cost with the cost control since most of the company respondents did not gave

the actual cost control and only gave approximate amounts based on ratios.

The type of products produced is not significant because the cost

controlled by manufacturing companies through CVP analysis will be the same

disregarding the type of products it produced.

The volume of products produced is also not significant because volume is

just the quantity to be produced by a company and not the actual amount they

will incur in producing products consequently cost control is not associated with

it.

According to Roque (2016), CVP model helps in evaluating the effects of

cost on changes in volume for the purpose of reviewing profits achieved and

costs incurred. For example, a company may want to purchase new equipment

to increase its production level. The new machine may increase fixed costs. In

this case, to find out the figure by which to decrease the variable cost in order to

maintain the same profit level, the company uses CVP analysis. A deep study of

the elements of cost is necessary to understand how to reduce cost like the

variable cost and fixed cost. In manufacturing industries, profit planning is

achieved through CVP analysis.

 37

Table 9

Correlation between the Cost – Volume – Profit Analysis and Profit Planning of

Manufacturing Companies in terms of Sales Volume

Sales Volume
Profile Interpretation
r – value p – value

Usage -0.39 0.08 Not Significant

Benefits -0.48 0.03 Significant
Legend: p<0.05 Significant
p>0.05 Not Significant

Presented in the Table 9 is the relationship between CVP analysis and

profit planning of selected manufacturing companies in Laguna in terms of sales

volume. Based on the results, the computed value of test statistics as to usage

and benefits of CVP analysis are equal to -0.39 and -0.48 respectively and p –

value of 0.08 and 0.03 respectively.

This clearly indicates that usage is not significant while benefits derived

from CVP analysis are significant and therefore failed to reject Ho.

The usage of cost – volume – profit analysis in terms of sales volume has

no significant relationship with the profit planning because according to the

respondents, CVP analysis can be used to determine the break – even point and

the contribution margin and it may help to determine the profit but it cannot help

to increase the profit. Also, they said that it is because of the decision – making

of the management and on how they implement different marketing strategies to

arrive at an increased profit.

 38

It was proved by Budugan (2008), that CVP analysis may be used for

forecasting purposes to calculate the profit yield by a given amount of sold goods

however not used as a method to obtain the desired profit. It may also be used

by the management to set the necessary sales level, used in the budgeting

process and may be used also in separating fixed and variable costs that help in

gathering relevant costs, related information useful in short – term decision –

making.

The benefits derived from cost – volume – profit analysis in terms of sales

volume has a significant relationship with the profit planning because CVP

analysis is used to calculate different costs related with the amount of sales

volume a company will produce to be able to foresee the amount of profit they

will be having. Also, the respondents are aware on the benefits they gain on

using CVP analysis as a tool to determine their profit.

As stated by Enkeleda (2018), the benefits derived from application of this

analysis include effective cost control, high production, service capacity, and

increased profitability. Also, applying CVP analysis during the decision – making

process increases management efficiency to a large extent.

Overall, the respondents have awareness on the benefits derived from the

cost – volume – profit analysis but they are not using it to increase their profit.
 39

Table 10

Correlation between the Cost – Volume – Profit Analysis and Profit Planning of

Manufacturing Companies in terms of Cost Control

Cost Control
Profile Interpretation
r – value p – value

Usage -0.39 0.08 Not Significant

Benefits -0.48 0.03 Significant
Legend: p<0.05 Significant
p>0.05 Not Significant

Table 10 presents the relationship between CVP analysis and profit

planning of selected manufacturing companies in Laguna in terms of cost control.

Based on the results, the computed value of test statistics as to usage and

benefits of CVP analysis are equal to -0.39 and -0.48 respectively and p – value

of 0.08 and 0.03 respectively. This clearly indicates that usage is not significant

while benefits derived from CVP analysis are significant and therefore failed to

reject the null hypothesis.

The usage of cost – volume – profit analysis in terms of cost control has

no significant relationship with the profit planning because the decision – making

made by the management, the implemented marketing strategies and the

cooperation made by the different departments of a company are the key to have

an increase in their profit.

Alleyne (2011), stated that management accounting practices specifically

the CVP analysis enable management to obtain relevant information for a

 40

meaningful decision – making. Management accounting practices were very

effective and contributed to the success of the entities, consistent and

standardized, but it is not a tool applicable on obtaining an increase in profit.

On the computation of the anticipated profit of every company, CVP

analysis plays a big role. The interviewed respondents disagree that there is a

significant relationship between the cost – volume – profit analysis in terms of

sales volume and the profit planning because they are aware to the advantages

derived from using the CVP analysis.

According to Younis (2012), through CVP analysis managers can discern

any probable effects of change in price or sales volume. It is a benefit a health

center gets from using CVP analysis and thus CVP analysis give benefits like an

effective cost control, high production, service capacity, and increased

profitability as stated by Enkeleda (2018).

 41

Chapter IV

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

This chapter shows the summary of findings, conclusions and

recommendations related to the effect of using cost – volume – profit analysis on

the profit planning of selected manufacturing companies in Laguna. This study

aimed to find out the relationship between the factors of this study. Specifically, it

sought to answer the following questions (1) what is the company profile in terms

of: number of years operating in the business; type and volume of products

produced; and amount of fixed cost and variable cost (2) usage and benefits of

CVP analysis (3) the sales volume and cost control of the business.

Summary of Findings

The following are the findings of the study:

In terms of profile, most of the respondents operates 21 years and above,

produces non – perishable goods and majority of them generates large units

which is 12,001 and above. This merely indicates that the study has large scales

and some small scales companies who had responded to the survey

questionnaire and this have a negative relationship in cost – volume – profit

analysis because the younger and smaller businesses has more large sales

volume and cost control than the older and larger ones.

There‟s a perfect relationship between fixed cost, variable cost and CVP

analysis since most of the company respondents gave estimates based on ratio.
 42

In addition, type of products produced is not relevant because CVP analysis does

not vary on what kind of products. It can be used in whatever product the

company is producing. So with the volume of products because the less unit of

products the less cost and the more unit of products the more cost so it is not

actually on the volume it vary but on the cost.

When it comes to benefit of CVP analysis, there is significant relationship

in as much as they agreed that they have benefits derived on this technique such

as forecasting possible maximum profit and minimizing cost. However, usage of

CVP analysis has no significant relationship considering the fact that the

company respondents are not only using CVP analysis for their profit planning

but they also formulates strategic management to attain their target income. It is

not only based on the proper use of CVP analysis but also on the efficiency and

effectiveness of the strategies they imposed.

Conclusions

The findings gathered in this study lead to the formulation of the following

conclusions:

The hypothesis that there is no significant relationship between profile and

profit planning of selected manufacturing companies in Laguna in terms of sales

volume and cost control is accepted, due to some of the profile of the

respondents such as years in operation and amount of fixed cost and variable

cost are significant so it is rejected; and the other profiles like type and volume of

products produced per month is not significant so it accepted Ho.

 43

The usage of CVP analysis is not significant while the benefits derived

from it is significant, concluded that the hypothesis there is no significant

relationship between CVP analysis and profit planning of selected manufacturing

companies in Laguna in terms of sales volume and cost control is also accepted.

Recommendations

Summary of findings and conclusions of the study provided the

researchers a clear perception with regards to the effects of using cost – volume

– profit analysis on the profit planning of selected manufacturing companies in

Laguna and be able to express the following recommendations.

1. Managers. Because of the discouraging relationship between the cost –

volume – profit analysis and the profit planning in terms of sales volume

and cost control of a certain business, they may account for the benefits

derived from CVP analysis for a meaningful decision – making and they

may discover new tools like cost – constraint – profit (CCP) analysis

wherein contribution maximization is still relevant with the differences in

cost that vary with output and cost that remain constant thus they replaced

production volume with a constraint on the horizontal axis.

2. Future Entrepreneurs. They may consider using CVP analysis in their

business as a strategy to get the break – even point and may consider

using any other method like the CCP analysis to increase their profit.

3. Future Researchers. They may pursue the same study but it is

suggested to subject their research instrument to validity and reliability

 44

testing. They may consider using respondents of business with the same

range in doing their research so that they could get patterns of practices of

doing CVP analysis and profit planning.

 45

BIBLIOGRAPHY

A. Book

Roque, Rodelio S. (2016).Management Advisory Service. Malabon,

Metro Manila, Philippines: Roque Press, Inc.

Agamata, Franklin T. (2014). Management Services. Davao City,

Philippines: Certs Publication

Cabrera, Ma. Elenita B. (2015) Management Accounting. Recto, Manila,

Philippines: GIC Enterprises & Co., Inc.

B. Journal

Luther, R. and B. O’ Donovan (2010).Cost-volume-profit analysis and the

theory of constraints. Journal of Cost Management Retrieved from

http://maaw.info/ArticleSummaries/ArtSumLutherODonovan98.htm

Kelly Rosemarie (2010). Cost Volume Profit (CVP) Analysis Retrieved

from cost-volume-profit-cvp-analysis.pdf

C. Related Studies

Ihemejea,J.C., Okereaforb Geff, Ogungbangbec Bashir M. (2015). Journal

of International Business Research and Marketing.Retrieved from

http://dx.doi.org/10.18775/jibrm.1849- 8558.2015.11.3001

Georgiev Dragan (2015). Application of ‘cost – volume – profit’ analysis in

 46

the hotel industry. Retrieved from

20150401110108_526106120551bcff407d6f.pdf

Briciu, Sorin (2010). Cost Volume Profit Model, the Break-even Point and

the Decision making process in the hospitality industry. Retrieved

from http://www.researchgate.net/publication/49615434

Koebel Bertrand M, Chen Xi. (2013). Fixed cost, variable cost, markups

and returns to scale. Retrieved from 2013-13.pdf

Ameyaw Daniel Sasu (2016). CVP and sensitive analysis of Ntow Poultry

farm. Retrieved from Sasu_Daniel.pdf

Predrag MARJANOVIC1, Dejan T. RIZNIC2, Branko Z. LJUTIC3

(2013).Validity of Information Based on CVP Analysis for the Need

of Short – term Business Decision Making.Retrieved from

MarjanovicP-Oradea-2013.pdf

Budugan Dorina, GeorgescuIuliana(2008).Use of the Cost Volume Profit

Analysis to Estimate Earnings. Retrieved from

01_C01_Budugan_IGeogescu.pdf

Alleyne Philmore, Marshall Diana (2011). An Exploratory Study of

Management Accounting Practices in Manufacturing Companies in

Barbados. Retrieved from 8.pdf

DalciIhan, Tanis Veyis Naci (2015). Activity-Based Cost-Volume-Profit

Analysis: Another Approach to Break-even Analysis. Retrieved from

Activity-based-Cost-volume-profit-Analysis_-Another-Approach-To-
 47

Break-even-Analysis59832-50234.pdf

Younis Mustafa, Jabr Samer, Smith Pamela, Al-Hajeri Maha, Hartmann

Michael (2012).Cost-Volume-Profit Analysis and Expected Benefit

of Health Services: A Study of Cardiac Catheterization Services.

Retrieved from f85e2ab3d13c8614de0b0f4762afae07a050.pdf

Salehi Hamid, Ansari Fardieh, Rezaie Hamided (2014). Economic Benefit

and the Analysis of Cost, volume and profit (CVP) Retrieved from

paper-28022015093917.pdf

Ciumag Anca, Ciumag Marin (2010). Analysis of the relationship between

cost, price and profit in lignite extraction.Retrieved from

http://mpra.ub.uni-muenchen.de/30969/

Adesina, Oluseyi Temitope (2015). Accounting Information and Profit

Planning: The Case of Nigeria Listed Manufacturing Companies.

Retrieved from Accounting-Information-and-Profit-Planning-the-

case-of-Nigeria-Listed-Manufacturing-Companies..pdf

Enkeleda Lulaj (2018). Role of Analysis CVP (Cost-Volume-Profit) as

Important Indicator for Planning and Making Decisions in the

Business Environment. Retrieved from Enkeleda.pdf

D. Websites

Bizfluent (2016).The Benefits of Analayzing Cost – Volume Profit

Retrieved from https://bizfluent.com/info-8428943-benefits-

analyzing-costvolumeprofit.html
 48

Lean Production (2011). Theory of Constraints. Retrieved from

www.leanproduction.com/theory-of-constraints.html

Tocico (2016). The Theory of ConstraintsRetrieved from

http://www.tocico.org/?page=toc

Investopedia (2018). Break – Even Analysis. Retrieved from

https://www.investopedia.com/terms/b/breakevenanalysis.asp

Investopedia (2018). Contribution Margin. Retrieved from

https://www.investopedia.com/terms/c/contributionmargin.asp

Investopedia (2018). Cost Accounting. Retrieved from

https://www.investopedia.com/terms/c/cost- accounting.asp

Business Dictionary (2018). Cost Reduction. Retrieved from

http://www.businessdictionary.com/definition/cost-reduction.html

Investopedia (2018). Fixed Cost. Retrieved from

https://www.investopedia.com/terms/f/fixedcost.asp

Investopedia (2018). Managerial Accounting. Retrieved from

https://www.investopedia.com/terms/m/managerialaccounting.asp

Investopedia (2018). Variable Cost. Retrieved from

https://www.investopedia.com/terms/v/variablecost.asp
 49

APPENDICES

Appendix A
Letter to the Dean
Republic of the Philippines
Laguna State Polytechnic University
Province of Laguna

College of Business Management and Accountancy

Melinda Almazan,
Associate Dean
College of Business Management & Accountancy
Laguna State Polytechnic University
San Pablo City, Laguna Province

Dear Ma‟am,

We, the 4th year Bachelor of Science in Accountancy students will be

conducting a study entitled “Effect of Cost – Volume – Profit Analysis on the
Profit Planning of Selected Manufacturing Companies in Laguna” under the
subject undergraduate thesis. In this connection, the following students are
requesting for approval to conduct a survey for the research study.

Respectfully yours,
Atienza, Glaissel M.
Mercado, Ricarly May K.
Noted by:
Ismaela M. Bawica
Thesis Adviser

Approved / Disapproved by:

Melinda Almazan,
Associate Dean, CBMA
 50

Appendix B
Letter to Respondents
Republic of the Philippines
Laguna State Polytechnic University
Province of Laguna

College of Business Management and Accountancy

Dear Respondents,

We are the students of the College of Business Management and

Accountancy, Bachelor of Science in Accountancy, of the Laguna State
Polytechnic University – San Pablo City Campus and presently doing a research
about the “Effect of Cost – Volume – Profit Analysis on the Profit Planning
of Selected Manufacturing Companies in Laguna.” We request you kindly fill
the questionnaire below and assure you that the data gathered shall be kept
confidential.

Respectfully yours,
Atienza, Glaissel M.
Mercado, Ricarly May K.

Noted by:
Ismaela M. Bawica
Thesis Adviser

Approved / Disapproved by:

Melinda Almazan,
Associate Dean, CBMA
 51

Appendix C

Survey Questionnaire

EFFECT OF COST – VOLUME – PROFIT ANALYSIS ON THE

PROFIT PLANNING OF SELECTED MANUFACTURING

COMPANIES IN LAGUNA

I. Company Profile

Name of the Company (Optional): _________________________

Address of the Company: ________________________________

Using CVP analysis:

Yes No

Profile as to:

1. Number of years in operation:

1 – 5 years 16 – 20 years
6 – 10 years 21 years and above
11 – 15 years
2. Type of products produced
Non – perishable goods Perishable goods
Cosmetics Junk foods
Gadgets Oil
Others:______ Others:______
____________ ____________
 52

3. Volume of products produced per month (kilos / liters)

1 to 3000 9,001 to 12,000
3,001 to 6,000 12,001 and above
6,001 to 9,000
4. Amount of fixed cost: _______________________

5. Amount of variable cost: _____________________

II. Questionnaire

Kindly rate the appropriate answer on the given data from 1 (lowest) to 5

(highest). Put a check (√) on the box that corresponds to your answer.

Legend:

5 – Strongly Agree 2 – Disagree

4 – Agree 1 – Strongly Disagree

3 – Moderate

A. Usage of CVP Analysis 5 4 3 2 1

The CVP Analysis was used to:
1. give emphasis on contribution margin for the
purposes of profit analysis and control.
2. increase the profit growth.
3. provide measurement to determine the
appropriate sales to achieve desired profit.
4. provide break-even of total sales and total
cost.
5. anticipate the change in income if the manager
is convinced that the reduction in selling price
 53

would result to increase/decrease of products

sold.
6. estimate required sales to yield at the same
net income as projected in the pro-forma
statement.
7. calculate the magnitude of variable cost for
different volume levels.
8. attain the ultimate goal of firms which is to
maximize profit.
9. segregate the fixed and variable elements of
mixed costs.
10. indicate the amount of actual or planned sales
without incurring a loss.

B. Benefits Derived from CVP analysis 5 4 3 2 1

1. It can anticipate profit under varying conditions.

2. It can analyze effects of variables affecting
profit planning through forecasting.
3. Management can control costs.
4. It can control the operations to come up with
the target profit.
5. It can foresee the cost and profit if there‟s a
decided new product.
6. It is able to change the amount of fixed cost if
there‟s an objective of increasing the income.
7. It can calculate the indifference point where the
firm must exceed.
8. It can go with the flow of cost behavior which
may happen
9. It helps to identify break-even point if a
company sells one or more that product.
10. It computes the maximum increase in sales
that will lead to possible maximum profit.
 54

III. Data

 Sales Volume: _________________________________

 Cost Control: __________________________________

Signature of Respondent
 55

Appendix D
Raw Data

A. Profile of the Respondents

Respondents Q1 Q2 Q3 Q4 Q5

1 5 1 5 343,000 1,491,000
2 5 1 1 70,000 80,000
3 2 1 5 5,900,000,000 6,350,000,000
4 5 1 5 7,000,000 20,000,000
5 3 1 4 8,550,000 13,000,000
6 4 1 5 11,000,000 11,500,000
7 5 2 5 17,000 500,000
8 4 1 5 1,200,000 1,500,000
9 5 2 5 500,000 1,500,000
10 5 2 5 500,000 1,500,000
11 4 1 5 500,000 700,000
12 5 1 5 650,000 850,000
13 5 2 5 450,000 900,000
14 1 2 3 100,000 200,000
15 5 1 5 2,500,000 3,000,000
16 4 1 4 300,000 400,000
17 5 1 5 600,000 1,200,000
18 5 2 5 1,200,000 1,650,000
19 5 1 5 600,000 800,000
20 5 2 5 2,000,000 3,000,000
21 4 1 5 700,000 1,500,000
22 5 2 5 900,000 1,200,000
Mean 4.36 1.36 4.64 1,947,272.73 3,251,060.61
 56

B. Usage of Cost – Volume – Profit Analysis

Respondents Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10

1 4 3 4 4 4 4 4 4 4 4
2 3 3 3 3 3 3 3 3 3 3
3 5 4 5 3 3 4 2 2 3 2
4 5 4 5 5 4 5 5 5 5 4
5 4 3 4 3 4 3 5 4 3 5
6 5 5 5 5 5 4 3 5 5 5
7 4 5 3 4 4 4 5 5 5 3
8 4 5 5 4 4 4 4 5 4 4
9 5 5 5 4 4 5 5 5 5 4
10 5 5 5 5 4 5 4 4 4 5
11 4 4 5 4 3 4 3 3 4 4
12 5 5 5 5 4 4 4 4 3 3
13 5 4 5 4 4 3 3 5 4 5
14 5 5 5 4 5 3 2 3 4 3
15 5 3 4 3 5 5 5 4 5 5
16 3 5 5 5 5 3 5 4 2 5
17 4 5 5 4 4 2 4 5 5 5
18 5 4 3 3 3 3 4 5 3 5
19 4 5 3 3 2 5 3 5 4 4
20 5 4 5 4 3 3 5 5 4 5
21 5 3 3 5 4 4 5 5 4 3
22 5 4 2 3 3 4 3 4 4 3
Mean 4.5 4.23 4.27 3.95 3.82 3.82 3.91 4.27 3.95 4.05
 57

C. Benefits Derived from Cost – Volume – Profit Analysis

Respondents Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10

1 4 4 3 3 4 4 4 4 4 4
2 3 3 3 3 3 3 3 3 3 3
3 4 3 5 4 3 2 2 2 3 3
4 4 5 5 5 4 4 5 3 5 3
5 5 4 5 3 4 3 4 4 3 4
6 4 5 4 4 5 4 5 5 4 5
7 5 5 5 3 4 3 4 5 5 4
8 5 5 5 5 4 4 4 5 4 5
9 5 5 5 5 4 4 4 4 5 5
10 5 5 5 5 5 4 4 4 5 5
11 4 5 5 5 3 3 4 4 5 4
12 3 3 2 4 4 5 5 5 3 4
13 5 3 4 4 4 3 5 5 3 5
14 3 2 4 4 5 5 4 3 4 4
15 4 5 2 5 3 5 5 5 5 4
16 4 5 4 5 5 3 5 3 5 5
17 4 4 5 3 5 5 5 3 4 5
18 3 5 3 3 4 3 3 5 3 4
19 5 5 5 5 5 4 5 4 4 4
20 3 2 3 4 5 4 4 4 3 5
21 5 4 4 3 4 4 5 4 5 5
22 3 3 3 3 4 5 5 5 4 5
Mean 4.09 4.09 4.05 4.00 4.14 3.82 4.27 4.05 4.05 4.32
 58

D. Components of Cost – Volume – Profit Analysis on the Profit Planning

Respondents Q1 Q2

1 2,100,000 400,000
2 1,780,000 500,000
3 2,250,000,000,000 6,350,000,000
4 30,000,000 16,000,000
5 31,500,000 12,000,000
6 30,000,000 15,000,000
7 1,000,000 200,000
8 2,300,000 700,000
9 1,500,000 300,000
10 6,000,000 2,000,000
11 1,800,000 450,000
12 2,000,000 700,000
13 1,700,000 400,000
14 600,000 75,000
15 6,000,000 1,200,000
16 800,000 150,000
17 2,000,000 500,000
18 2,700,000 450,000
19 1,500,000 200,000
20 3,500,000 800,000
21 2,200,000 300,000
22 2,600,000 500,000
Trimmed Mean 6,553,030.30 2,582,575.76
 59

CURRICULUM VITAE

Atienza, Glaissel M.
376, SitioCalumpit, Barangay Santisimo Rosario
San Pablo City, Laguna 4000
09090270513
glaissel.atienza@gmail.com

Career Objectives: To find a job wherein I can apply all the knowledge I have
together with my skills and talents that can be used to achieve the objectives of
the company.

I. EDUCATIONAL ATTAINMENT

Tertiary: Bachelor of Science in Accountancy

Laguna State Polytechnic University – San Pablo City Campus
Barangay Del Remedio, San Pablo City
2015 – 2019
Secondary: Fifth Honor
Santisimo Rosario National High School
Barangay Santisimo Rosario, San Pablo City
2011 – 2015
Primary: Fifth Honor
Santisimo Rosario Elementary School
Barangay Santisimo Rosario, San Pablo City
2004 – 2011
II. SEMINARS ATTENDED
 Hotel Accounting
LSPU – SPCC, San Pablo City, Laguna
April 7, 2018
 Personality Development
Vikings Luxury Buffet, Marikina City, Metro Manila
March 22, 2018
 Who Moved My Cheese?
Junior Philippine Institute of Accountants
LSPU – SPCC, San Pablo City, Laguna
February 17, 2018
 English Skills Training Program and Employability Skills Training
Program
World Wide Link Educational Development Inc.
 60

LSPU – SPCC, San Pablo City, Laguna

October 10 – 11, 2017
 6th Business Management Conference
Step Up International Services Inc.
Alonte Sports Complex, Biñan, Laguna
September 23, 2017
 Wealth Through Radicals
Junior Philippine Institute of Accountants
LSPU – SPCC, San Pablo City, Laguna
November 15, 2016
 Clash of Plans
Junior Philippine Institute of Accountants
LSPU – SPCC, San Pablo City, Laguna
February 17, 2016
 Empowering Management and Leadership Skills in the Mind of the
Students
Junior Philippine Institute of Accountants
LSPU – SPCC, San Pablo City, Laguna
September 29, 2015
 Culture of Excellence, Leadership and Loyalty, Secret of a Wide
Range of Competency
LSPU – SPCC, San Pablo City, Laguna
August 23, 2015

III. ON – THE – JOB TRAINING

 Picar Development Inc.
HeneralMascardo St. Brgy. Bangkal, Makati City, Manila
June 20, 2018 – July 25, 2018

IV. SPECIAL SKILLS

 Accounting skills.
 Skilled in preparing reports for the company.
 Sufficient knowledge regarding Microsoft Office.
 Skilled in coping up with changes.
 Good leadership and managerial skills

V. PERSONAL INFORMATION

Age: 20 years old

Gender: Female
Date of Birth: 16th of April, 1998
Place of Birth: San Pablo City
Citizenship: Filipino
 61

Religion: Roman Catholic

Civil Status: Single

VI. CHARACTER REFERENCES

 Patrick Henry Ilagan
Santisimo Rosario National High School
Barangay Santisimo Rosario, San Pablo City
Principal
09083778445

 Socorro Gemma Agranum, CPA

Laguna State Polytechnic University – San Pablo City Campus
Barangay Del Remedio, San Pablo City
Professor
09198838906

 Mark YonieEnrade
Picar Development Inc.
HeneralMascardo St., Brgy. Bangkal, Makati City, Manila
Human Resource Specialist
09158077509

I hereby certify that the above information is true and correct to the best
of my knowledge and belief.

Atienza, Glaissel M.
 62

Mercado, Ricarly May K.

9053. P. Alcantara St., Barangay VII – A
San Pablo City, Laguna 4000
09502395855
carlymaymercado@yahoo.com

Career Objectives:To obtain experience as an employee in a globally

competitive organization and people-oriented environment that will allow me to
learn more about the application of accounting in the real workplace and able
me to maximize my organizational, leadership and people skills to improve
oneself while helping the organization reach its corporate goals.

I. EDUCATIONAL ATTAINMENT

Tertiary: Bachelor of Science in Accountancy

Laguna State Polytechnic University – San Pablo City Campus
Barangay Del Remedio, San Pablo City
2015 – 2019
Secondary: Third Special Honorable Mention
San Jose National High School
Barangay San Jose, San Pablo City
2011 – 2015
Primary: Second Topnatcher
San Pablo Central School
San Pablo City
2005 – 2011

II. SEMINARS ATTENDED

 Hotel Accounting
LSPU – SPCC, San Pablo City, Laguna
April 7, 2018
 Personality Development
Vikings Luxury Buffet, Marikina City, Metro Manila
March 22, 2018
 Who Moved My Cheese?
Junior Philippine Institute of Accountants
LSPU – SPCC, San Pablo City, Laguna
February 17, 2018
 63

 English Skills Training Program and Employability Skills Training

Program
World Wide Link Educational Development Inc.
LSPU – SPCC, San Pablo City, Laguna
October 10 – 11, 2017
 6th Business Management Conference
Step Up International Services Inc.
Alonte Sports Complex, Biñan, Laguna
September 23, 2017
 Wealth Through Radicals
Junior Philippine Institute of Accountants
LSPU – SPCC, San Pablo City, Laguna
November 15, 2016
 Clash of Plans
Junior Philippine Institute of Accountants
LSPU – SPCC, San Pablo City, Laguna
February 17, 2016
 Empowering Management and Leadership Skills in the Mind of the
Students
LSPU – SPCC, San Pablo City, Laguna
September 29, 2015
 Culture of Excellence, Leadership and Loyalty, Secret of a Wide
Range of Competency
LSPU – SPCC, San Pablo City, Laguna
August 23, 2015

III. ON – THE – JOB TRAINING

Laguna State Polytechnic University – San Pablo City Campus
Barangay Del Remedio, San Pablo City, Laguna
June 11, 2018 – July 20, 2018

IV. SPECIAL SKILLS

 Proficient in Microsoft Office Applications: MS Word, MS Excel and

MS PowerPoint
 Leadership Skills
 Negotiating and Persuading Skills
 Good Communication Skills
 Analytical Skills
 64

V. PERSONAL INFORMATION

Age: 19 years old

Gender: Female
Date of Birth: 27th of May, 1999
Place of Birth: San Pablo City
Citizenship: Filipino
Religion: Roman Catholic
Civil Status: Single

VI. CHARACTER REFERENCES

 Elaine Francisco
Laguna State Polytechnic University – San Pablo City Campus
Barangay Del Remedio, San Pablo City
Professor
09474085481

 Socorro Gemma Agranum, CPA

Laguna State Polytechnic University – San Pablo City Campus
Barangay Del Remedio, San Pablo City
Professor
09198838906

 Darwin Ofrin
Laguna State Polytechnic University – San Pablo City Campus
Barangay Del Remedio, San Pablo City
Professor
09988590662

I hereby certify that the above information is true and correct to the best
of my knowledge and belief.

Mercado, Ricarly May K.