Cost-Volume-Profit Relationship
by Ricky Hardianto
1. Contribution Margin (Sales - Variable Expenses)
1.1. Break Even Point (CM - Fixed Expenses = 0)
1.2. Contribution Margin Ratio (CM / Sales)
2. Aplication of CVP Concepts
2.1. Variable Expense Ratio
2.2. Change in Fixed cost and Sales Volume
2.3. Change in Variable cost and Sales Volume
2.4. Change in Fixed cost, Sales Price, and Sales Volume
2.5. Change in Variable cost, Fixed Cost and Sales Volume
2.6. Change in Selling Price
3. The Margin of Safety (Total Budgeted Sales - Break Even Sales)
4. Assumptions of CVP Analysis
4.1. Selling Price is Constant
4.2. Variable and Fixed Cost is Constant
4.3. Sales MIx is constant
4.4. Number of units Product = Number units Sold
5. CVP Considerations
5.1. Cost Structure and Profit Stability
5.2. Operating Leverage (CM / Net Operating Income)
6. Target profit and Break Even Analysis
6.1. Terget profit Analysis
6.1.1. The Equation Method
6.1.1.1. Target Profit + Fixed Expenses/Unit CM
6.1.2. Target profit Analysis in Term of Sales Dollars
6.1.2.1. Target Profit + Fixed Expenses / CM Ratio
6.2. Break Even Analysis
6.2.1. BreakEven in Unit Sales
6.2.1.1. Fixed Expenses / Unit CM
6.2.2. Break Even in Sales Dollars
6.2.2.1. Fixed Expenses / CM Ratio