...GEZ PETROL STATION: USING COST-VOLUME-PROFIT ANALYSIS FOR PLANNING By KU NOR IZAH KU ISMAIL (Corresponding author) School of Accountancy UUM College of Business Universiti Utara Malaysia E-mail: norizah@uum.edu.my Tel: 04-9283906 And WAN NORDIN WAN HUSSIN Othman Yeop Abdullah Graduate School of Business Universiti Utara Malaysia GEZ PETROL STATION: USING COST-VOLUME-PROFIT ANALYSIS FOR PLANNING INTRODUCTION As an Area Manager of GEZ Berhad, a major oil company in Malaysia, in 2011, Mr Aiman was responsible for directing the sales activities of more than twenty petrol stations in the northern region of Malaysia. He was also responsible to train petrol station dealers and staff, initiate sales promotion and implement key initiatives to improve sales. Despite being a stable business with continuous increase in vehicles, often times, petrol station operators faced with the difficulty of sustaining the business, leading to the termination of the dealership license. The lack of knowledge in finance and costing, among others, contributed to business failures. Realising the importance of management accounting concepts and tools such as cost allocation and CVP analysis, Mr Aiman believed that the dealers and their relevant staff should have the knowledge in cost accounting. They should be able to differentiate between variable and fixed expenses, prepare a financial statement and perform a cost-volume-profit (CVP) analysis. To help the dealers perform the CVP...
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...9 4.0 Case Questions and Answers 11 4.1 How lucrative is the petrol station business? 11 4.2 Since the margin on fuel business is very low (6%) compared to convenience store (20%), do you agree that the convenience store subsidizing the fuel business?.........................................................................................................13 4.3 If the government raised the RON95 price to RM2.10, do you anticipate the profitability of the business will be eroded? 15 4.4 If a credit card sale is reduced from 40% to 20%, what is the effect on overall profitability? ……16 4.5 What is the appropriate basis to allocate the cashier cost between the four products RON95, RON97, Diesel and SelesaMart................................................22. 4.6 Is utility cost fixed or variable? What difference does it make to the breakeven point of RON95 if it is classified as (i) fixed cost, and (ii) variable cost? 23 5.0 Conclusion 25 1. INTRODUCTION GEZ Bhd which is a major oil company in Malaysia has been developed and operated the petrol stations under three basic concepts, which are namely Company Owned Station (COS), Partially Company Owned Station (PCOS) and Dealer Built Station (DBS). Basically, the operators of PCOS and COS were landowners themselves or those who are being nominated and agreed by GEZ. However, under the Dealer Built Station (DBS) concept, the operators were not the landowners. GEZ petrol...
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...[pic] SCHOOL OF ACCOUNTANCY UNIVERSITI UTARA MALAYSIA FIRST SEMESTER 2014/2015 (A141) COURSE CODE : BKAL3063 COURSE : INTEGRATED CASE STUDY PRE-REQUISITE : BKAF3073 FINANCIAL ACCOUNTING & REPORTING IV 1. SYNOPSIS This is a capstone course for the accountancy programs, which integrates knowledge from financial accounting & reporting, management accounting, taxation, audit, finance, management and business–related, information technology and other social sciences courses. Experiential exercises are embedded in this course to support learners’ effort in independent learning. 2. OBJECTIVES This course is designed to enable learners to integrate knowledge from the various related disciplines and to enhance their technical core competencies and their problem solving skills in the unstructured business environment. 3. LEARNING OUTCOMES Upon completion of the course, students are able to: i) interprete various accounting and business related issues in an organisational context. ii) undertake independent research. iii) develop alternative solutions to issues, devise action plans, and resolve implementation issues. iv) communicate ideas, views and recommendations effectively both verbally and in writing. v) demonstrate awareness of ethical considerations as part of the decision making process. vi) demonstrate leadership and teamwork in issues...
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