Formulario completo Management Accounting

Break even analysis

TFC = Wages & fringe benefits + Rent + Accounting services + Depreciation + Utilities + Supplies

Break even at BEP

OP.INC assumed to be 0 = Total cost - cost of goods sold

• TR - TC = 0 = Sales ($) - VC - pre-tax INCOME (UP • X) - TFC - (UVC • X) = 0
• Solve for X
• Cost unit only have you if per multiply to remember
• X = TFC *
• Sales ($) = TFC * UNITS OF NUMBER

See table UP - UVC

• % CM Contribution margin = (UP • X) - (UVC • X) = unitary CM if more products total
• %CM UNIT CM = (UP - UVC)
• You do not have UVC:
• 1) X = sales →
• 2) UVC = total VC
• % CONTRIBUTION MARGIN = CM remains constant UP X sales sales total sales not volume need to add the tax%

Cash flow break-even point

• CM when O.I equals 0 = TOTAL FIXED COST value in order to have the
• Cash fixed costs = total fixed costs - depreciation
• Scarse CM = prod. unit CM real depreciation cost = total fixed cost - (depreciation + …%) used instead of %CM
• X = CASH FIXED COSTS weighted CM unit = Σ uCM • weight%

Multi product

• UP - UVC Sum TFC; %CM (=ΣCM : t.sales)

Minimum price sales

• UP = TFC + (UVC • Q) Minimum price = unit variable costs + shipping costs + tot fixed costs
• Other way Q if target O.I is +… % of sales

Target profit (= operating income)

1. Compute total CM% Product mix - split $
2. Total sales = …%s + TFCs → s = TFC or PROFIT contribution margin CM% CM% - …%

• Find total BEP $
• X
• UP - X • UVC - TFC = OPERATING INCOME
• Weight% = unit of product → X = TFC + target O.I
• UP = TFC + target O.I (required number of units sold) (required dollar sales) total sales (UP - UVC) % CM
• Split value = $ • weight%

Unitary price

• Quantity = split value

When fixed costs increase

• When UVC increase of …% | Keeping same CM%
• UP
• Total sales $ = TFC + nFC
• Current CM% = UP - UVC n = new CM%
• New UVC = UVC + …% p = projected
• New UP = nUVC1 - cCM%

Volume of sales

• Same income | same UP | UVC + …%)
• Pre-tax INCOME = (UP - UVC) • X - TFC
• Projected income statement (w/ expected sales volume) nUVC = UVC + …%
• X = TFC + INCOME Find new UVC and solve for X (UP - nUVC)
• Volume of sales in DOLLARS = Revenues TR = X • UP*

Taxes are irrelevant if constant = we use pre-tax income for computation

Formula

• (UP • X) = TFC + (UVC • X) + INCOME TARGET: after-tax income of …

Explanation

• Find pre-tax income Profits increases faster
• PRE-TAX INCOME = after-tax income : (1 - …% tax percentage)
• Than volume of sales if we have most of the expenses fixed.
• X = TFC + INCOME (UP - UVC)

Operating leverage

• Compute the degree of OPERATING LEVERAGE [: change in profit caused by change in volume]
• Operating leverage = contribution margin → higher operating leverage = higher changes in profit

Cash movements