PHẠM BÍCH VÂN - 215043341

HOÀNG BÍCH NGỌC - 225220888

NGUYỄN PHẠM PHƯƠNG UYÊN- 195030139

COST-VOLUME-PROFIT
RELATIONSHIPS OF THE
COFFEE HOUSE

Data for The Coffee House are shown:

P : 55,000 VND
V : 15,000 VND
Q : 10,000 units
F : 100,000,000 VND
Contribution Income
1. Sales 550,000,000 VND
2. Variable Expenses 150,000,000 VND
3. Contribution Margin 400,000,000 VND
4. Fixed Expenses 100,000,000 VND
5. Net Operating Income 300,000,000 VND
CONTRIBUTION MARGIN RATIO

CM/Sales= 72,72%

Signification
1. In analyzing the data for The Coffee House, we can see that the company's revenue from sales
amounts to 550,000,000 VND. After deducting the variable expenses of 150,000,000 VND, we
arrive at the Contribution Margin of 400,000,000 VND. The fixed expenses are accounted for at
100,000,000 VND, leaving the company with a Net Operating Income of 300,000,000 VND.
2. This indicates that The Coffee House is operating with a healthy profit margin, which is essential
for its continued success and growth. By managing costs effectively and maintaining a strong
focus on sales, the company can further enhance its financial performance and ensure long-term
sustainability in the market..

APPLY CVP RELATIONSHIPS IN

THE COFFEE HOUSE

What is the profit impact if THE COFFEE HOUSE can increase units sales from 10000 to 10500 by increasing the
monthly advertising budget by 30,000,000VND?
Q’ = 10500 units
Profit : 300,000,000 VND
New Fixed Expenses : 300,000,000 + 30,000,000 = 330,000,000 VND
New Net Operating Income : (55,000-15,000)x10500-330,000,000 = 90,000,000 VND
Explain:
After recalculating, we see that New Net Income decreased, lower than Net Income (90,000,000<300,000,000), so
The Coffee House cannot increase sales from 10,000 units to 10,500 units by increasing the monthly advertising
budget to 30,000,000 VND.
TARGET PROFIT & MARGIN OF SAFETY IN THE COFFEE HOUSE

Suppose the coffee house wants to know how many cups of

coffee it must sell to make a target profit of 1,000,000,000VND.

Calculate required number of cups to sell (Q):

Calculate contribution margin
Q = (T + F) / CM
per cup (CM):
Q = (1,000,000,000 + 100,000,000) / 40,000
Q = 27,500 cups
CM = P - V
CM = 55,000 VND - 15,000 VND
CM = 40,000 VND The coffee house needs to sell approximately 55,000 cups of
coffee to reach their target profit of 1,000,000,000 VND.

The coffee house's break-even sales

dollars SALES AT BEP = F/CM RATIO
UNIT SALES AT BEP = Fixed expensees/CM UNIT
= F/((P-V)/P)
= 100,000,000/40,000
= 100,000,000/((40,000)/55,000)
= 2,500 CUPS = 137,500,000 VND

the Coffee House needs to achieve 137,500,000 VND in total sales to break even.

MARGIN OF SAFETY

MARGIN OF SAFETY IN DOLLARS= Total sales - break-even sales

actual sales = P x Q = 550,000,000 - 137,500,000
= 55,000 x 10,000 = 412,500,000 VND
= 550,000,000 VND

margin of salety ratio = (margin of safety/actual sales)x100%

= (137,500,000/550,000,000)x100%
= 25%
 THE COFFEE HOUSE
COFFEE FRUIT DRINKS CAKES TOTAL

SALES $275,000,000 VND $165,000,000 VND $110,000,000 VND $550,000,000 VND

VARIABLE EXPENSES 75,000,000 VND 45,000,000 VND 30,000,000 VND 150,000,000 VND
CONTRIBUTION MARGIN $200,000,000 VND $120,000,000 VND $80,000,000 VND $400,000,000 VND
FIXED EXPENSES 100,000,000 VND
NET OPERATING INCOME $300,000,000 VND

CM ratio = 72.72% Dollar sales at BEP =137,500,000 VND

Percentage of each product
Coffee = 275,000,000/550,000,000 = 50%
Fruit drinks = 165,000,000/550,000,000 = 30%
Cakes = 110,000,000/550,000,000 = 20%

Dollar sales at BEP of each product

Coffee = 50% x 137,500,000 = 68,750,000 VND
Fruit drinks = 30% x 137,500,000 = 41,250,000 VND
Cakes = 20% x 137,500,000 = 27,500,000 VND

The Coffee House needs to sell that amount to reach break-even point
and receive profit afterward.

NOTES:
BEP: break-even point, the level of sales at which profit is zero.

Degree of operating leverage = 1,33

IF Sales increase/decrease 5%, Net income increase/decrease 5% x 1,33

The higher Margin of safety, the better the company.

CHAPTER 3
THE COFFEE HOUSE

7TH JULY
MILK CHOCOLATE BENEFITS
Lorem ipsum dolor sit mollit, fugiat
ut adipiscing elit, et sed do sunt
tempor officia ut quia dolore magna
aliquacillum.

DARK CHOCOLATE BENEFITS

Today we celebrate the
International Chocolate Day Lorem ipsum dolor sit mollit,
fugiat ut adipiscing elit, et sed do
sunt tempor officia ut quia dolore
magna aliquacillum.

POROUS CHOCOLATE BENEFITS

Lorem ipsum dolor sit mollit, Lorem ipsum dolor sit mollit, fugiat
fugiat adipiscing elit, et sed ut adipiscing elit, et sed do sunt
do sunt tempor officia ut quia tempor officia ut quia dolore
dolore magna aliquacillum. magna aliquacillum.

Lorem ipsum dolor sit mollit, fugiat ut

adipiscing elit, et sed do sunt tempor
officia ut quia dolore magna

! aliquacillum.

Lorem ipsum dolor sit mollit, fugiat ut

Lorem ipsum dolor sit mollit,
fugiat ut adipiscing elit, et sed
! adipiscing elit, et sed do sunt tempor
officia ut quia dolore magna
aliquacillum.
do sunt tempor officia ut quia
dolore magna aliquacillum.

CHOCOLATE CHOCOLATE
statistics
800
PROVIDES
Lorem ipsum dolor sit
mollit, fugiat ut adipiscing TODAY
elit, et sed do sunt tempor
officia ut quia dolore
TONS
magna aliquacillum.

@REALLYGREATSITE