CASE 2

CVP ANALYSIS

Sweet Corp. produces two kinds of Candy: Chocolate Candy and Coffee Candy. Sherly, company’s president holds
management meeting with Anton, Production Manager, Fitri, Marketing Manajer, and Hafiz, Accounting Manager.
The following are their conversation:

Sherly: Dear all, today we will discuss our current year’s financial achievement and our next year’s financial
plan. I would like our profit before tax for next year $2,200,000. Fitri, could you tell us your sale
performance in this current year
Fitri: Right Ms. Sherly. In this current year, we can sell Chocolate Candy at price $10 per pack and Coffee
Candy $7.50 per pack, still same as previous year selling price. It’s difficult for us to increase the
selling price because of tight competition. With this price, we can all the products that we produce.
Sherly: Thanks Fitri. What about our current year’s production, Anton?
Anton: Well. Our production for this year are 3,000,000 packs for Chocolate Candy and 2,000,000 packs for
Coffee Candy.

Sherly: Thanks a lot Anton.

Haviz, I think do you have data of manufacturing cost, and marketing & administrative expenses.
Could you explain to us?

Haviz: Yes Ms. Sherly. Actually our manufacturing cost for current year is a little bit lower than previous
year. Our manufacturing costs per pack are as follows:

Chocolate Candy Coffee Candy

- Direct raw material costs $1.50 $1.25
- Direct labor costs 1.00 1
- Variable factory overhead costs 0.50 0.25
- Fixed factory overhead costs 0.75 0.50
Total $3.75 $3.00

Our variable marketing and administrative expenses per pack sold for current year is $2 for Chocolate
Candy and $1.50 for Coffee Candy. We have two kinds of fixed costs: direct fixed costs and common
fixed costs. Our direct fixed costs, not including fixed FOH are $750,000 for Chocolate Candy and
$500,000 for Coffee Candy. We have common fixed cost for both products are $6,500,000.

Required:
a. What are managerial uses of CVP Analysis?
- Untuk Menentukan Break Event Point (Titik Impas)
- Untuk mencapai target laba sebelum pajak dan setelah pajak
- Rekayasa variable Cost Volume Profit
b. Determine the sales mix based on current sales

c. What are direct fixed cost and common fixed cost? Give the examples.
Biaya tetap langsung adalah biaya tetap yang dapat ditelusuri ke setiap produk dan akan dihindari jika produk
tersebut tidak ada.
Contoh :
 Biaya tetap umum (tidak langsung) = biaya tak terhindarkan (biaya tetap ada apapun alternative yang dipilih)
adalah biaya yang tidak dapat ditelusuri ke setiap produk dan tidak dapat dihindari meskipun produk
dijatuhkan
Contoh :

d. For current year, how many units for each kind of products should be sold to obtain breakeven point?
e. For next year, how many units for each kind of product should be sold to obtain targeted profit before tax for
next year? Assuming selling price and cost data are still same as the current year
f. Prepare projected income statement to proof your answer on requirement (d)
g. Determine margin of safety (MOS). What does it mean?
h. Prepare the CVP Analysis graph
i. What are CVP Analysis assumption?
Analisis Cost Volume Profit:
- Pendapatan Linier dan Fungsi Biaya
- Harga, total biaya tetap dan biaya variable per unit dapat diidentifikasi secara akurat dan tetap konsisten
atas rentang yang relevan
- Apa yang dihasilkan adalah yang dijual
- Bauran penjualan diketahui dan bauran penjualan konstan
- Harga jual dan biaya diketahui dengan pasti