Cost volume profit analysis

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Cost volume profit analysis

  1. 1. Management Accounting Prof. Hafiz Zafar Ahmad Qamar Farooq Hailey College of Commerce E-mail:pakarmy009@hotmail.com Cost Volume Profit Analysis (CVP Analysis)
  2. 2. Management Accounting Cost Volume Profit Analysis (CVP Analysis) It is a planning study. Under Marginal Costing Types of Analysis  Breakeven Analysis (No Profit & No loss)  profit volume Analysis Formulas: 1. Breakeven Point (Volume): TC= TR FC = All fixed cost Contribution = Sales – All variable cost 2. Breakeven Point (value): i. ii. 3. Sales volume to earn target profit: Qamar Farooq (M.com 2012-2016) Morning Page 1
  3. 3. Management Accounting 4. Sales value to earn target profit : i. ii. 5. Margin of safety: MOS, MS MOS= Budgeted sales – Breakeven point MOS Ratio = MOS/Budgeted sales ×100 Relationships: 1. variable and contribution : Sales – variable cost = contribution Sales – contribution = variable cost If variable cost 40% of sales then 60% contribution of sales. 2. Breakeven and Mos Sales – Breakeven = MOs Sales - MOs = Breakeven point Lecture Given by: Prof.Hafiz Zafar Ahmad Hailey College of Commerce Qamar Farooq (M.com 2012-2016) Morning Page 2

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