This document discusses cost volume profit (CVP) analysis, which is a planning study used under marginal costing. It describes two types of CVP analysis: breakeven analysis, which determines the sales volume where there is no profit or loss, and profit volume analysis. The document provides formulas to calculate the breakeven point in terms of volume and value, sales volume needed to earn a target profit, sales value needed to earn a target profit, and margin of safety. It also describes the relationships between variable costs and contribution, and between breakeven point and margin of safety. The lecture was given by Prof. Hafiz Zafar Ahmad at Hailey College of Commerce.

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. 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
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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
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