CHAPTER 9 Break-Even Point and Cost-Volume-Profit Analysis QUESTIONS 1. The variable costing income statement classifies costs by the way they behave. Variable costs are deducted from revenues to determine contribution margin and then fixed costs are deducted from contribution margin to determine operating profit. Break-even analysis involves a study of fixed costs, variable costs and revenues to determine the volume at which total costs equal total revenues. Hence, variable costing
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Case 4-33: Cost Structure; Target Profit and Break Even Analysis Question 1: Compute Pittman Company’s break-even point in sales dollars for next year assuming: a. The agents’ commission remains unchanged at 15% $12,000,000 in sales is needed to break even while employing an outside sales force with commissions of 15% of sales. b. The agents’ commission rate is increased to 20% $13,714,286 in sales is needed to break even while employing an outside sales force with commissions of
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Fundamentals of Cost Accounting 3e William N. Lanen University of Michigan Shannon W. Anderson Rice University Michael W. Maher University of California at Davis FUNDAMENTALS OF COST ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2011, 2008, 2006 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or
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brief summary (P1) 4 My business idea (Minimum 100 words) 4 The location & reason: Add Map! 4 Aims and Objectives (P1) 5 Action Plan (P1) 6 Swot analysis (P1) 7 Business threats 7 Legal Considerations (P1) 8 Proprietor’s background (P3.1) 11 Personal Development Plan (P3.2) 13 Market research Plan (P2.1) 14 The target market (P2.2) 15 The customers (P2.3) 16 The competition (P2.4) 17 The competition (P2.5) 18 Test marketing/ prospective clients (P2.6) 20 Advertising
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Advantage 3 SITUATION ANALYSIS 4 Figure ll SWOT Analysis 4 Industry Analysis 5 Figure lll. Market Analysis 6 Competitor Analysis 6 Company Analysis 6 Customer Analysis 7 MARKET PRODUCT FOCUS 7 Marketing & Product focus 7 Marketin & Product Objectives 7 Target Markets 7 Points of Difference 8 Positioning 8 MARKETING PROGRAM _____________________________________________9 Product & Price Strategy___________________________________________________9 Break-Even Analysis______________________________________________________9
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____________________________ Date ______4th June, 2010_________ Table of Contents Executive Summary 5 1. Introduction 6 1.1 Objectives 7 1.2 Missions 7 1.3 Vision 7 2. Company Summary 7 2.1 Company Ownership 7 3. Product 8 4. Market Analysis 9 4.1 SWOT Analysis 9 4.1.1 Strengths 9 4.1.2 Weakness 9 4.1.3 Opportunities 9 4.1.4 Threats 9 4.2 Marketing Segmentation 10 4.2.1 Demographic 10 4.2.2 Marketing Differentiation and Positioning 10 4.3 Marketing Mix 10 4.3.1 Product 10
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Concepts Marginal Cost This is the variable cost of one unit of product or a service. Marginal Costing It is a principle whereby variable cost are charged to cost units and fixed cost attributable to the relevant period is written off in full against contribution for that period. Absorption Costing A method of costing by which all direct cost and applicable overheads are charged to products or cost centres for finding out the total cost of production. Absorbed cost includes production
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itself. The potential for our target market to be attracted is also very high. This is because our target market consists mainly on students surrounding the area especially from Multimedia University and also residents around or within 3 kilometers radius from our Fun and Games Café outlet. As we know the lifestyle of people nowadays they tend to like to enjoy and relax more. Other reasons they can hang out at our place includes social and releases tension. Our start up cost would be RM 121, 600 which
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Legal Structure 2 Description of the Business 2 Products or Services 3 Location 3 Management 3 Personnel 3 Methods of Record Keeping 3 Insurance 4 Security 4 Summary 5 MARKETING Target Market 5 Competition 5 2 Methods of Distribution 5 Advertising 7 Pricing 7 Product Design 7 Timing of Market Entry Location 8 Industry Trends 8 7 FINANCIAL DOCUMENTS Summary of Financial Needs 8 Sources and Uses of Funds Statement Cash Flow Statement (Budget) 9 Three-year Income Projection 10 Break-even Analysis
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Situation Analysis A. Internal 1. The Organization’s Goals and Objectives 2. The Organization’s Strengths and Weaknesses B. External 1. Customer Analysis 2. Competitor Analysis 3. PEST Analysis C. Identify Key Problems & Opportunities 1. Perform SWOT Analysis 2. Set Priorities 3. Develop an Overall Assessment II. Segmentation, Targeting, and Positioning (STP) A. Identify Relevant Markets and Segments B. Select Target Markets and Target Segments
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