CVP Flashcards
What is the cost function?
y= a + bx
Equation 1 and 2 of cost function?
Eq. 1 Ey=na + bEx
Eq. 2 Exy=aex +bEx2
SALES
-VC =
CM
CM-FC=
PROFIT
how to compute CM/u?
UNIT SP- UNIT VC
How to compute CMR?
CM/ SALES
OR
UNIT CM/ UNIT SP
Formula for:
BEP (unit)
FC / CMU
Formula for:
BEP Peso
FC / CMR
Formula for:
BEP RATIO
BEP/ SALES
Formula for:
Sales Unit with targeted Profit
FC + Targeted Profit/ CMU
Formula for:
Sales peso with target profit
FC + Target Profit/ CMR
Is it necessary that profit is always before tax? if yes, how to compute if given is after tax?
AFTER TAX / (100%- TAX RATE)
Formula for:
MOS
Sales-BEP
or
Profit/CMR
Formula for:
MSR
MS/Sales
or
Profit Ratio/CMR
Formula for:
Sales
MS+ BEP
Formula for:
Sales Ratio
MSR + BEPR
FOrmula to use in reconciling VC NI to AC NI is?
🔼PROFIT= 🔼 INVTY X FFOH
If Y is associated with peso sign and X is the activity driver
a. if in case of conflict, or common x or y, which one should be followed?
b. if dalawa ang X, and amount associated with Y is different. Which one should we choose?
a. Follow your X
b. Follow the amount which is nearer in the future. If example, from months of January-May, March with an amount of 6k and May with amount of 6.1k, we should choose the May month. Since we are cost predicting the future.
Things to consider when solving High-Low Method
- Read the questions carefully.
1.1 Always consider the relevant range - Use lower amounts when substituting amounts in the equation (y=a + bx)
- In making graph, consider the circumstances if 1 unit is considered, 2 units or 3.
- Fixed Cost is either Zero or Positive only.
