17a marginal costing & breakeven analysis

Chapter 17 continued 17a: Marginal costing and breakeven analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The story so far ... ,[object Object],[object Object],[object Object]

Marginal costing ,[object Object],[object Object],[object Object]

Classifying costs by behaviour ,[object Object],[object Object],[object Object],[object Object],[object Object]

Exercise 1 Variable and fixed costs ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Solution 1 Variable and fixed costs

Calculating contribution ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Exercise 2 Marginal cost statement ,[object Object],[object Object],[object Object],[object Object],[object Object]

Pro forma Cotswold Coolers Marginal cost statement

Solution 2 Cotswold Coolers Marginal cost statement

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Techniques based on marginal costing

Breakeven analysis ,[object Object],[object Object],[object Object],[object Object]

Exercise 3 Breakeven point in units ,[object Object],[object Object],[object Object],[object Object],[object Object]

Solution 3 Breakeven point in units

Breakeven point in sales value or % of capacity

Exercise 4 Level of activity to achieve a target profit ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Solution 4 Level of activity to achieve a target profit

Margin of safety ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Breakeven graph Costs/Sales (£) £1,350 Profit £500 £1,264 £850 Fixed costs ←-> Margin of safety 233 units 0 395 628 Activity level (units) Sales revenue PROFIT LOSS Breakeven point Variable costs

Conclusions ,[object Object],[object Object],[object Object],[object Object]

17a marginal costing & breakeven analysis

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17a marginal costing & breakeven analysis