TOPICS : COST-VOLUME-PROFIT (CVP) ANALYSIS

COVERAGE:
1. Cost Behaviour
2. Separation of mixed cost into fixed and variable element
3. Calculation for break-even point (in unit and in value)
4. Calculation of margin of safety (in unit and in value)
5. Preparation of income statement using marginal costing approach
6. Sensitivity analysis
FORMULA TO REMEMBER
1. High-low method
To find the variable cost per unit
= Total Cost at the highest quantity Total cost at the lowest quantity
Highest quantity Lowest Quantity
To find the fixed cost:
Total Cost = Fixed Cost + Variable Cost
= Fixed Cost + (Variable Cost per unit X Quantity)
2. Break-even Point (in unit)

Fixed Cost________
Contribution Margin per Unit

3. Contribution Margin per Unit = Sales Price per Unit Variable Cost per unit
4. Break-even Point (in unit)

5. Contribution margin ratio

= Sales Price per Unit Variable Cost per unit

Sales Price per Unit

6. Margin of Safety (in unit)

7. Margin of Safety (in value) =

8. Profit =

Fixed Cost________
Contribution Margin Ratio

Current Sales Unit Break-even Point Unit

Current Sales RM Break-even Point RM

Sales RM Total Cost RM

9. Marginal costing approach to calculate profit :

Sales
Less: Variable Cost
Contribution Margin
Less: Fixed Cost
Profit

RM
XX
XX
XX
XX
XX

UNDERSTANDING THE TERMINOLOGIES

1. Cost behavior

2. Fixed Cost

3. Variable cost

4. Mixed cost/semi-variable cost/semi fixed cost

5. High-low method

6. Contribution margin

7. Contribution margin ratio

8. Break-even point

9. Marginal costing

10. Margin of safety

11. Sensitivity analysis

Prepared By:
Madam Sitti Syamsiar Muharram
Lecturer ACC280, UiTM Sabah