1. Cost Volume Profit (CVP) Analysis
Cost ANALYSIS
Cost Volume Profit (CVP) Analysis

2. Cost Volume Relationship Cost Behavior Analysis
COST BEHAIVOR
VARIABLE
FIXED
MIXED
Semi-Variable
Semi-Fixed

3. Determining Variable or Fixed Base
Cost Volume Relationship Determining Variable or Fixed Base
Determining Variable or Fixed Base
Account Analysis
Engineering Approach
Mathematical and Statistical Approach
The Scatter Graph Method
The High-Low Method
Semi-Average Method
Least-Squares Regression Method

4. Engineering (Analytical) Approach
5-4
Cost Volume Relationship Determining Variable or Fixed Base
Engineering (Analytical) Approach
The engineering approach classifies costs based upon an industrial engineer’s evaluation of production methods, material, labor and overhead requirements.
This approach is particularly useful when no past experience is available concerning activity and costs.

5. Engineering (Analytical) Approach
5-5
Cost Volume Relationship Determining Variable or Fixed Base
Engineering (Analytical) Approach
It is the methodology which calculates the relationship primarily between the cost and the quantity by using amount and then cost subsequently.

6. Cost Volume Relationship-Determining Variable/Fixed Base
5-6
Cost Volume Relationship-Determining Variable/Fixed Base
Engineering Analysis-Illustration
Ex: The maximum annual production capacity of ABC Co. is unit furniture. Minimum production unit is 800 unit. The engineer’s evaluation of production, material, labor and other expenses are as follows:
Direct Material: 2 m3 wood material for each production is been consumed and the unit cost of material is 3 TL.
Direct Labor: Employees work 1,5 hours for each product and the unit cost of labor is 2 TL.
Depending on the production unit, company uses spare part (yedek parça) for each machinery. For production range unit the indirect material cost is 100 TL, for unit, 200 TL.
Company pays TL annual premium (ikramiye) for each worker and 2 TL product efficiency premium (indirect labor) for each product. Indirect labor working hour is 0,5 hour.
The annual depreciation cost is TL and rent cos is TL.
The production range (amounts) for first half of the year are as follows:
January
February
March
April
May
June
Total
Production Unit
800
900
1.000
1.100
1.300
6.000

7. Cost Volume Relationship-Determining Variable/Fixed Base
5-7
Cost Volume Relationship-Determining Variable/Fixed Base
Engineering Analysis-Illustration
Direct Material: 2 m3 wood material for each production is been consumed and the unit cost of material is 3 TL.
𝑌 𝐷𝑀 = 2 𝑚 3 𝑥 3 𝑇𝐿 𝑥 → 𝒀 𝑫𝑴 =𝟔𝒙 (𝑥=𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑢𝑛𝑖𝑡)
Direct Labor: Employees work 1,5 hours for each product and the unit cost of labor is 2 TL.
𝑌 𝐷𝐿 = 1,5 ℎ 𝑥 2 𝑇𝐿 𝑥 → 𝒀 𝑫𝑳 =𝟑𝒙 𝑥=𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑢𝑛𝑖𝑡

8. Cost Volume Relationship-Determining Variable/Fixed Base
5-8
Cost Volume Relationship-Determining Variable/Fixed Base
Engineering Analysis-Illustration
Other Expenses (Overheads)
Indirect Material: Depending on the production unit, company uses spare part (yedek parça) for each machinery. For production range unit the indirect material cost is 100 TL, for unit, 200 TL.
Indirect Labor: Company pays TL annual premium (ikramiye) for each worker and 2 TL product efficiency premium (indirect labor) for each product. Indirect labor working hour is 0,5 hour.
𝑌 𝐼𝐿 = 0,5 ℎ 𝑥 2 𝑇𝐿 𝑥+1.800→ 𝒀 𝑰𝑳 =𝒙+𝟏.𝟖𝟎𝟎 (𝑥=𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑢𝑛𝑖𝑡)
Depreciation: 𝒀 𝑫𝑬𝑷 =𝟑.𝟎𝟎𝟎
Rent: 𝒀 𝑹𝑬𝑵𝑻 =𝟐.𝟒𝟎𝟎
𝒂= ∆𝒀 ∆𝑿 →= 200− −1300 = =0,2→ 𝒀 𝑰𝑴 =𝟎,𝟐𝒙 (𝑥=𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑢𝑛𝑖𝑡)

9. Cost Volume Relationship-Determining Variable/Fixed Base
5-9
Cost Volume Relationship-Determining Variable/Fixed Base
Engineering Analysis-Illustration
Direct Material: 𝒀 𝑫𝑴 =𝟔𝒙
Direct Labor: 𝒀 𝑫𝑴 =𝟑𝒙
Other Expenses:
Indirect Material: 𝒀 𝑰𝑴 =𝟎,𝟐𝒙
Indirect Labor: 𝒀 𝑰𝑳 =𝒙+𝟏.𝟖𝟎𝟎
- Depreciation: 𝒀 𝑫𝑬𝑷 =𝟑.𝟎𝟎𝟎
Rent: 𝒀 𝑹𝑬𝑵𝑻 =𝟐.𝟒𝟎𝟎
𝑻𝑪 𝑨𝒏𝒏𝒖𝒂𝒍 =𝟏𝟎,𝟐𝒙+𝟕𝟐𝟎𝟎
𝑻𝑪 𝑴𝒐𝒏𝒕𝒉𝒍𝒚 =𝟏𝟎,𝟐𝒙+𝟔𝟎𝟎

10. Mathematical and Statistical Methods
Cost Volume Relationship Determining Variable or Fixed Base
Mathematical and Statistical Methods * 10 20 X Y
The Scatter-Graph Method
The High-Low Method
Semi-Average Method
Least-Squares Regression Method .

11. The Scatter-Graph Method
5-11
Determining Variable or Fixed Base
Mathematical And Statistical Methods
The Scatter-Graph Method
A scatter-graph is a quick and easy way to isolate the fixed and variable components of a mixed cost.
The first step is to identify the cost, which is referred to as the dependent variable, and plot it on the Y axis. The activity, referred to as the independent variable, is plotted on the X axis. *
Total Cost 10 20
Volume X Y

12. The Scatter-Graph Method
5-12
Determining Variable or Fixed Base
Mathematical And Statistical Methods
The Scatter-Graph Method
The second step is to analyze the data points on the scatter-graph to see if they are linear, such that a straight line can be drawn that approximates the relation between cost and activity. *
Total Cost 10 20
Volume X Y
If the plotted data points do not appear to be linear, do not analyze the data any further. If there appears to be a linear relationship between the volume and cost, we will continue our analysis.
Plot the data points on a graph (total cost vs. activity).

13. Determining Variable or Fixed Base
Mathematical And Statistical Methods
The third step is to draw a straight line where an equal number of points reside above and below the line. Make sure that the straight line goes through at least one data point on the scatter-graph. * 10 20 X Y .
Draw a line through the data points with about an equal numbers of points above and below the line.

14. * Determining Variable or Fixed Base
Mathematical And Statistical Methods
Use one data point to estimate the total level of activity and the total cost. * 10 20 X Y
Total cost = 11
The fourth step is to identify the Y intercept.
This is where the straight line crosses the Y axis and is equal to the estimate of total fixed costs.
In this case, the fixed costs are 10.
x= 0,8
Fixed cost: 10

15. * Determining Variable or Fixed Base
Mathematical And Statistical Methods
The fifth step is to estimate the variable cost per unit of the activity (volume), which in this example is the cost per volume. In our case, we used the first data point that was on the straight line. * 10 20 X Y
Total cost = 11
x= 0,8
Fixed cost: 10

16. The Scatter-Graph Method
Slope= Change in Cost Change in Volume →a= ∆Y ∆X
Horizontal distance is the change in activity. *
Total Cost 10 20
Volume X Y
Vertical distance is the change in cost.

17. Cost Volume Relationship-Determining Variable/Fixed Base
5-17
Cost Volume Relationship-Determining Variable/Fixed Base
Scatter-Graph-Illustration
EX (KB A.9-5): The machine hours (volume) and the total cost occurred in a year are as follows. Required: Ascertain the annual total cost function according to Scatter-Graph Method .
MOUNTHS
MACHINE HOURS
TOTAL COST
January
100
80.000
February 60
60.000
March
120
April
160
May
180
June
200
July
140
August
September 40
50.000
October
November
70.000
December 80

18. 𝑎= ∆Y ∆x = (140. 000−60. 000) (200−40) = 80. 0000 160 =500 Y= ax+b →60
𝑎= ∆Y ∆x = ( −60.000) (200−40) = = Y= ax+b →60.000=500∗40+b b=40.000
TC=500x
B(200; )
A(40;60.000)

19. The High and Low Method Determining Variable or Fixed Base
5-19
Determining Variable or Fixed Base
Mathematical And Statistical Methods
The High and Low Method *
Total Cost 10 20
Volume X Y
The high-low method can be used to analyze mixed costs if a scatter- graph plot reveals an approximately linear relationship between the X and Y variable.

20. The High and Low Method Determining Variable or Fixed Base
5-20
Determining Variable or Fixed Base
Mathematical And Statistical Methods
The High and Low Method
The first step in the process is to identify the high volume and its related total cost and the low volume (level of activity) with its related total cost.
Secondly ascertain the unit variable cost with change in high and low level. *
Total Cost 10 20
Volume X Y

21. Cost Volume Relationship-Determining Variable/Fixed Base
5-21
Cost Volume Relationship-Determining Variable/Fixed Base
High and Low Method-Illustration
EX (KB A.9-5): The machine hours (volume) and the total cost occurred in a year are as follows. Required: Ascertain the annual total cost function according to High and Low Method.
If there is same high or low level for different periods, calculate the average cost of high or low periods.
Months
Machıne Hours
Total Cost
January
100
80.000
February 60
60.000
March
120
April
160
May
180
June
200
High Volume
July
140
August
September 40
50.000
Low Volume
October
November
70.000
December 80
Average Cost = =60.000

22. The High and Low Method Determining Variable or Fixed Base
5-22
Determining Variable or Fixed Base
Mathematical And Statistical Methods
The High and Low Method
According to the given data the high and low volume and cost will be used to calculate the unit variable cost.
X L = X H =200
Y L = Y H =
a= ∆Y ∆x = Y H − Y L X H − X L = − −40 = =562,5 Y= ax+b → =562,5∗40+b b= TC Monthly =562,5x TC Annual =562,5x
X=200 →TC=562,5∗ =

23. The High and Low Method Determining Variable or Fixed Base
5-23
Determining Variable or Fixed Base
Mathematical And Statistical Methods
The High and Low Method
H(200; )
Y= 562,5x
L(40;60.000)

24. Semi-Average Method Determining Variable or Fixed Base
Mathematical And Statistical Methods
Semi-Average Method
For this method the given data is divided into two parts, preferably with the same number of years. After the data have been divided into two parts depending on low and high volumes. Finally , the average (arithmetic mean) of each part is obtained. We thus get two points including low volume average and high volume average. Each point is plotted at the mid-point of the class interval covered by the respective part and then the two points are joined by a straight line which gives the required trend line.

25. Semı-Average Method Determining Variable or Fixed Base
Mathematical And Statistical Methods
Semı-Average Method
For example if we are given data from January to December over a period of 12 months the two equal parts will be each 6 months. In case of odd number of periods like 9, 13, 17, etc., two equal parts can be made simply by volumes. If the volume of middle period is close to low volumes period it will be a part of low volume periods or vise versa.

26. Cost Volume Relationship-Determining Variable/Fixed Base
5-26
Cost Volume Relationship-Determining Variable/Fixed Base
Semi-Average Method-Illustration
EX (KB A.9-5): The machine hours (volume) and the total cost occurred in a year are as follows. Required: Ascertain the annual total cost function according to Semi- Average Method.
Months
Machıne Hours
Total Cost
January
100
80.000
February 60
60.000
March
120
April
160
May
180
June
200
July
140
August
September 40
50.000
October
November
70.000
December 80

27. Semi-Average High Volumes
5-27
Cost Volume Relationship-Determining Variable/Fixed Base
Semi-Average Method-Illustration
Period
Months
Machıne Hours
Total Cost 1
September 40
50000
Group of Low Volume 2
November
70000 3
February 60
60000 4
October
80000 5
December 80 6
January
100
Semi-Average Low Volumes
63,33
70.000 7
March
120
100000
Group of High Volume 8
August
110000 9
July
140
120000 10
April
160 11
May
180 12
June
200
150000
Semi-Average High Volumes
153,33
,33

28. Semı-Average Method Determining Variable or Fixed Base
5-28
Determining Variable or Fixed Base
Mathematical And Statistical Methods
Semı-Average Method
According to the given data the high and low volume and cost will be used to calculate the unit variable cost.
X L =63, X H =153,33
Y L = Y H = ,33
a= ∆Y ∆x = Y H − Y L X H − X L = ,33− ,33− 63,33 = ,33 90 ≅537
Y= ax+b → =537∗63,33+b b= TC Monthly =537x TC Annual =537x

29. Semi-Average Method Determining Variable or Fixed Base
5-29
Determining Variable or Fixed Base
Mathematical And Statistical Methods
Semi-Average Method
Y= 562,5x
H(153,33; ,33)
Y= 537x
L(63,33;70.000)

30. Least-Squares Regression Method
Determining Variable or Fixed Base
Mathematical And Statistical Methods
Least-Squares Regression Method
The least-squares regression method is a more sophisticated approach to isolating the fixed and variable portion of a mixed cost. The least-squares method uses all the data points instead of just a few. This a statistical technique that may be used to estimate the total cost at the given level of activity (units, labor/machine hours etc.) based on historical cost data.

31. Least-Squares Regression Method
Determining Variable or Fixed Base
Mathematical And Statistical Methods
Least-Squares Regression Method
The term least-squares regression implies that the ideal fitting of the regression line is achieved by minimizing the sum of squares of the distances between the straight line and all the points on the graph.

32. Mathematical And Statistical Methods Least-Squares Regression Method
5-32
Mathematical And Statistical Methods
Least-Squares Regression Method
The formulas that are used for least-squares regression are complex. To simplify the method, linear equations are used to determine a and b parameters.
Y = ax + b
Y= Total Cost
a= Unit Variable Cost
x= volume
b= Total Fixed Cost
n=given period
Y = a x + b n
x.y =a x 2 +b x
𝑎= 𝑛 𝑥𝑦− 𝑥 𝑦 𝑛 𝑥 2 − 𝑥 2
𝑏= 𝑦−𝑎 𝑥 𝑛

33. Cost Volume Relationship-Determining Variable/Fixed Base
5-33
Cost Volume Relationship-Determining Variable/Fixed Base
Least Squares Regression Method-Illustration
EX (KB A.9-5): The machine hours (volume) and the total cost occurred in a year are as follows. Required: Ascertain the annual total cost function according to Least Squares Regression Method.
Months
Machıne Hours
Total Cost
January
100
80.000
February 60
60.000
March
120
April
160
May
180
June
200
July
140
August
September 40
50.000
October
November
70.000
December 80

34. Cost Volume Relationship-Determining Variable/Fixed Base
5-34
Cost Volume Relationship-Determining Variable/Fixed Base
Least Squares Regression Method-Illustration
Months (n)
Machıne Hours (x)
Total Cost (y) XY X2
January
100
80.000
10.000
February 60
60.000
3.600
March
120
14.400
April
160
25.600
May
180
32.400
June
200
40.000
July
140
19.600
August
September 40
50.000
1.600
October
November
70.000
December 80
6.400
Total
1300
Y = a x + b n → =1300 ∗ a + 12b
x.y =a x 2 +b x→ = ∗ a b

35. Least-Squares Regression Method
5-35
Determining Variable or Fixed Base
Mathematical And Statistical Methods
Least-Squares Regression Method
-108,3333/ =1300 ∗ a + 12b
= ∗ a b
− =− a − 1300 b
= a→a= ≅506,18
=1.300 ∗ a + 12b→ = 1.300(506,18) + 12b
b= − =39.331
Y=506,18 a

36. Least-Squares Regression Method
5-36
Determining Variable or Fixed Base
Mathematical And Statistical Methods
Least-Squares Regression Method
Months (n) X Y
January
100
80.000
February 60
60.000
March
120
April
160
May
180
June
200
July
140
August
September 40
50.000
October
November
70.000
December 80

37. * * * * * * * * * * Mathematical And Statistical Methods
5-37
Mathematical And Statistical Methods
Least-Squares Regression Method Y
Least-squares regression also provides a statistic, called the R2, that is a measure of the goodness of fit of the regression line to the data points. 20 * * * * * * * * * * 10
R2 varies from 0% to 100%, and the higher the percentage the better fit. X
Output from the regression analysis can be used to create the equation that enables us to estimate total costs at any activity level. The key statistic to examine when evaluating regression results is called R squared, which is a measure of the goodness of fit.

38. Comparing Results From the Three Methods
5-38
Determining Variable or Fixed Base-
Mathematical And Statistical Methods
Comparing Results From the Three Methods
The three methods for isolating the fixed and variable portions of a mixed cost yield slightly different results. Because these methods provide slightly different estimates of the fixed and variable cost components of the mixed cost.
The most accurate estimate is provided by the least-squared regression method. Less accurate results are usually associated with the scatter- graph. The high-low method provides results that fall somewhere in the middle of the other two methods (Blue Line).

39. Cost-Volume-Profit (CVP) Analysis Definition
Cost–volume–profit (CVP) is a form of cost accounting. It is a simplified model, useful for elementary instruction and for short-run decisions. CVP analysis looks the relationship between selling price, selling volume, cost and profit.

40. Cost-Volume-Profit (CVP) Analysis Definition
CVP, is a planning process that management uses to predict the future volume of activity, costs incurred, sales made, and profits received.

41. Cost-Volume-Profit (CVP) Analysis Definition
CVP analysis is the study of the effects of changes of costs and volume on a company’s profits.
CVP analysis is important in profit planning.
It also is a critical factor in management decisions.
The CVP analysis classifies all costs as either fixed or variable.
CVP analysis uses these two costs to plot out production levels and the income associated with each level.

42. Cost-Volume-Profit (CVP) Analysis Profit Function
CVP analysis is a mathematical equation that computes how changes in costs and sales will affect profit in future periods. 
𝑷𝒓𝒐𝒇𝒊𝒕=𝑻𝒐𝒕𝒂𝒍 𝑰𝒏𝒄𝒐𝒎𝒆−𝑻𝒐𝒕𝒂𝒍 𝑪𝒐𝒔𝒕
𝑻𝒐𝒕𝒂𝒍 𝑰𝒏𝒄𝒐𝒎𝒆=𝒇 ∗𝒙 →𝒙=𝒗𝒐𝒍𝒖𝒎𝒆, 𝒇=𝒖𝒏𝒊𝒕 𝒔𝒆𝒍𝒍𝒊𝒏𝒈 𝒑𝒓𝒊𝒄𝒆
𝑻𝒐𝒕𝒂𝒍 𝑪𝒐𝒔𝒕=𝒂𝒙+𝒃
𝑷𝒓𝒐𝒇𝒊𝒕=𝒇𝒙−𝒂𝒙 −𝒃
𝑷𝒓𝒐𝒇𝒊𝒕= 𝒇−𝒂 𝒙 −𝒃 →𝒙=𝒖𝒏𝒊𝒕𝒔 𝒔𝒐𝒍𝒅

43. Cost-Volume-Profit (CVP) Analysis Break-Even Point
Sales level at which operating income is zero
Sales above breakeven result in a profit
Sales below breakeven result in a loss

44. Cost-Volume-Profit (CVP) Analysis Breakeven Point
Breakeven point is the sales level at which operating income is zero
X Breakeven = Total Fixed Cost Contribution Margin x=units sold
Unit Contribution Margin = fx−ax x = f-a
X Breakeven = Total Fixed Contribution Margin Ratio x= Sales TL.
Unit Contribution Margin Ratio= fx−ax fx = f−a f

45. Cost-Volume-Profit (CVP) Analysis Income Statement Approach
The «Contribution Margin» will be used to compute the breakeven point on the base of units (sales quantity).
The «Contribution Margin Ratio» will be used to compute the breakeven point on the base of sales TL (sales amount).
𝑿 𝑩𝒓𝒆𝒂𝒌𝒆𝒗𝒆𝒏 = 𝑻𝒐𝒕𝒂𝒍 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕 𝑪𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝑴𝒂𝒓𝒈𝒊𝒏 (𝒇−𝒂) x=units sold
𝑪𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝑴𝒂𝒓𝒈𝒊𝒏 𝑹𝒂𝒕𝒊𝒐= 𝑻𝒐𝒕𝒂𝒍 𝑺𝒂𝒍𝒆𝒔−𝑻𝒐𝒕𝒂𝒍 𝑽𝒂𝒓𝒊𝒂𝒃𝒍𝒆 𝑪𝒐𝒔𝒕 𝑻𝒐𝒕𝒂𝒍 𝑺𝒂𝒍𝒆𝒔
𝑿 𝑩𝒓𝒆𝒂𝒌𝒆𝒗𝒆𝒏 = 𝑻𝒐𝒕𝒂𝒍 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝑴𝒂𝒓𝒈𝒊𝒏 𝑹𝒂𝒕𝒊𝒐 x=units sold

46. Cost-Volume-Profit (CVP) Analysis Contribution Margin Approach
The «Contribution Margin» will be used to compute the breakeven point on the base of units (sales quantity).
The «Contribution Margin Ratio» will be used to compute the breakeven point on the base of sales TL (sales amount).
𝑷𝒓𝒐𝒇𝒊𝒕=𝑻𝒐𝒕𝒂𝒍 𝑰𝒏𝒄𝒐𝒎𝒆−𝑻𝒐𝒕𝒂𝒍 𝑪𝒐𝒔𝒕
𝑻𝒐𝒕𝒂𝒍 𝑰𝒏𝒄𝒐𝒎𝒆=𝒇 ∗𝒙 →𝒙=𝒗𝒐𝒍𝒖𝒎𝒆, 𝒇=𝒖𝒏𝒊𝒕 𝒔𝒆𝒍𝒍𝒊𝒏𝒈 𝒑𝒓𝒊𝒄𝒆
𝑻𝒐𝒕𝒂𝒍 𝑪𝒐𝒔𝒕=𝒂𝒙+𝒃
𝑷𝒓𝒐𝒇𝒊𝒕=𝒇𝒙−𝒂𝒙 −𝒃
𝑷𝒓𝒐𝒇𝒊𝒕= 𝒇−𝒂 𝒙 −𝒃 →𝒙=𝒖𝒏𝒊𝒕𝒔 𝒔𝒐𝒍𝒅
𝑷𝒓𝒐𝒇𝒊𝒕= 𝒇−𝒂 𝒇 𝒙 −𝒃 →𝒙=𝒔𝒂𝒍𝒆𝒔 𝑻𝑳
𝑿 𝑩𝒓𝒆𝒂𝒌𝒆𝒗𝒆𝒏 = 𝑻𝒐𝒕𝒂𝒍 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕 𝑼𝒏𝒊𝒕 𝑪𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝑴𝒂𝒓𝒈𝒊𝒏 (𝒇−𝒂) = 𝒃 𝒇−𝒂 →𝒙=𝒖𝒏𝒊𝒕𝒔 𝒔𝒐𝒍𝒅
𝑿 𝑩𝒓𝒆𝒂𝒌𝒆𝒗𝒆𝒏 = 𝑻𝒐𝒕𝒂𝒍 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕 𝑼𝒏𝒊𝒕 𝑪𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝑴𝒂𝒓𝒈𝒊𝒏 𝑹𝒂𝒕𝒊𝒐 = 𝒃 𝒇−𝒂 𝒇 →𝒙=𝒔𝒂𝒍𝒆𝒔 𝑻𝑳

47. Cost-Volume-Profit (CVP) Analysis Contribution Margin Approach -Target Profit-Example
Example (K.B A.10.2): Total fixed cost of ABC Co. is TL and unit variable cost is 80 TL. The unit price is 100 TL. Tax rate is 20% and the net profit after tax for the year 20X TL. Required: Compute breakeven point in units and the sales unit for the year 20X1.
𝑿 𝑩𝒓𝒆𝒂𝒌𝒆𝒗𝒆𝒏 = 𝑻𝒐𝒕𝒂𝒍 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕 𝑼𝒏𝒊𝒕 𝑪𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝑴𝒂𝒓𝒈𝒊𝒏 (𝒇−𝒂) = 𝒃 𝒇−𝒂 →𝒙=𝒖𝒏𝒊𝒕𝒔 𝒔𝒐𝒍𝒅
𝑿 𝑩𝒓𝒆𝒂𝒌𝒆𝒗𝒆𝒏 = 𝟏.𝟎𝟎𝟎.𝟎𝟎𝟎 (𝟏𝟎𝟎−𝟖𝟎) =𝟓𝟎.𝟎𝟎𝟎 𝒖𝒏𝒊𝒕 →𝒙=𝒖𝒏𝒊𝒕𝒔 𝒔𝒐𝒍𝒅
𝑷𝒓𝒐𝒇𝒊𝒕+𝒃= 𝒇−𝒂 𝒙
𝑷𝒓𝒐𝒇𝒊𝒕 𝑩𝒆𝒇𝒐𝒓𝒆 𝑻𝒂𝒙=𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕+𝑻𝒂𝒙
𝑷𝒓𝒐𝒇𝒊𝒕 𝑩𝒆𝒇𝒐𝒓𝒆 𝑻𝒂𝒙=𝟔𝟒𝟎.𝟎𝟎𝟎+(𝑷𝒓𝒐𝒇𝒊𝒕 𝑩𝒆𝒇𝒐𝒓𝒆 𝑻𝒂𝒙∗𝟎,𝟐)
𝑷𝒓𝒐𝒇𝒊𝒕 𝑩𝒆𝒇𝒐𝒓𝒆 𝑻𝒂𝒙= 𝟔𝟒𝟎.𝟎𝟎𝟎 𝟎,𝟖𝟎 =𝟖𝟎𝟎.𝟎𝟎
𝑷𝒓𝒐𝒇𝒊𝒕+𝒃= 𝒇−𝒂 𝒙 𝒙= 𝑷𝒓𝒐𝒇𝒊𝒕+𝒃 (𝒇−𝒂) 𝒙= 𝟖𝟎𝟎.𝟎𝟎𝟎+𝟏.𝟎𝟎𝟎.𝟎𝟎𝟎 (𝟏𝟎𝟎−𝟖𝟎) =𝟗𝟎.𝟎𝟎𝟎 𝒖𝒏𝒊𝒕𝒔

48. Cost-Volume-Profit (CVP) Analysis Contribution Margin Approach-Example
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Cost-Volume-Profit (CVP) Analysis Contribution Margin Approach-Example
EX (KB. A.10.1): The production unit and the costs occurred in the first half of the year are as follows:
Mounts
Production Unit
Total Cost
January
1.800
2.400
February
3.800
2.700
March
1.000
2.200
April
1.500
2.300
May
2.500
June
4.000
2.800
Required:
Compute the total cost function according to High and Low Method.
The unit selling price is 1,2 TL.
Compute the monthly breakeven point both in units and TL.
In the case of units sold in a month, compute the profit.
To gain TL profit at actual selling price for a month, ascertain the sales in TL occurred in a month.
In the case of units sold in a year, compute the profit and margin of safety.