5. Cost Vol Profit-PPT.ppt - COST VO LU ME-P R O F IT COST-VOLUME-PROFIT In order to achieve greater profits management can do a variety of steps for

# 5. Cost Vol Profit-PPT.ppt - COST VO LU ME-P R O F IT...

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COST-VOLUME-PROFIT In order to achieve greater profits, management can do a variety of steps, for example: 1. Pressing the lowest possible cost and preserve the level of the selling price of existing sales volume. 2. Determining the selling price in accordance with the expected profit. 3. Increase sales volume so it can get set budget targets. COST-VOLUME-PROFIT COST-VOLUME-PROFIT Cost will determine the selling price, selling price will affect sales volume, sales volume will affect production volumes and production volumes will affect the cost per unit. Changes in one factor will affect the profit will be achieved. Cost-Volume-Profit analysis can help answer questions related to the number of sales needed to obtain a certain profit. BEP Analysis Break-Even Point (BEP) Analysis is an analytical technique to study the relationship between Fixed Cost, Variable Cost, profit and sales volume (TR). This analysis is also called Cost-Volume-Profit (CVP) analysis. In planning advantages, the BEP analysis is a planning approach that bases its profit on the relationship between Total Cost and sales revenue (Total Revenue). The Contribution Margin Statement Sales revenue xxx Variable expenses xxx Contribution Margin xxx Fixed expenses xxx Operating income xxx CVP When TR exactly the same size as TC, or companies do not make a profit and do not suffer losses (Π = 0), it's called Break-Even Point. In general, Π = TR-TC, BEP ==> TR = TC or Π = 0. Since TC = FC + VC, then TR = FC + VC or the TR - VC = FC. TR - VC called contribution margin. BEP occurs when contribution margin = FC. ASSUMPTIONS In concluding the analysis of BEP, the basic assumptions used in the following : 1. The costs are divided into VC and FC. 2. The amount of VC in the totality of change in proportion to TR. 3. The amount of FC in totality does not change although there are changes in TR.  #### You've reached the end of your free preview.

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