Cost-Volume-Profit Analysis

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Cost-Volume-Profit (CVP) Analysis
Profit

Revenues Costs

Selling Price Sales Volume Variable Costs Fixed Costs

2
CVP分析的應用
 損益兩平銷售量與營業額
 達成目標利潤之銷售量與營業額

 安全邊際
 營運槓桿
 成本結構的影響

 產品銷售組合

3
The Break-Even Point 損益兩平點

 The break-even point is the volume of activity

where the organization’s total revenues equal
total expenses (i.e., zero operating income)

 The basic formula may be further rearranged

and decomposed as follows:
Sales – VC – FC = 0
(SP x Q) – (VCu x Q) – FC = 0
Q is the breakeven point (in units)

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損益兩平點 (break-even point)
 假設我們舉辦一個活動，場租要花一萬元、行政管
理支出要二千元，而活動過程中要為每個人準備茶
點60元，一張票能賣100元，這時要賣出多少張票
才能達到損益兩平？

5
邊際貢獻式損益表

6
Contribution Margin Approach
For each additional surfboard sold, Curl
generates $200 in contribution margin.

Total Per Unit Percent

Sales (400 surfboards) $ 200,000 $ 500 100%
Less: variable expenses 120,000 300 60%
Contribution margin $ 80,000 $ 200 40%
Less: fixed expenses 80,000
Net income $ -

產品每一單位的邊際貢獻=$200
邊際貢獻率＝40%
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利用邊際貢獻求出損益兩平點
 Quantity of output sold at which total revenues
equal total costs

 Sometimes it is convenient to calculate

breakeven point directly in terms of revenue

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Breakeven Point: Graph Method
Cost-Volume Graph
損益兩平的延伸應用--如何達到目標利潤
• 損益兩平點是目標利潤為零時的銷售數量。

邊際貢獻法

公式法

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CVP案例練習
 A火鍋店每月房租$33,000，人員工資$28,000，
員工餐費$2,500，固定資產折舊$3,000，水電費
$2,000，易耗品費用為$500，保險費$3,000，邊
際貢獻率為60%，請計算該店每日保本營業額為
多少？
[解析]
 每月固定費用＝
33,000+28,000+2,500+3,000+2,000+500+3,000
=72,000
 每月保本營業額＝72,000/0.6=120,000
 日保本營業額＝120,000/30=4,000
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CVP案例練習
 承上例，假設A火鍋店的目標利潤為每年賺30萬
元(稅後)，稅率為20%，則達成目標利潤所需之
年營業額為多少？
[解析]
 稅前目標利潤＝300,000/0.8=375,000
 達成目標利潤所需之年營業額
＝(72,000*12+375,000)/0.6＝2,065,000

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Foundational Assumptions in CVP
 Revenue and costs behave in a linear function
that can be graphed as a straight line
 Total costs can be separated into fixed and
variable components
 The number of units sold is the only cost driver
 Selling price, variable cost per unit, and total
fixed costs are all known and constant
 For manufacturing firms, production
volume=sales volume

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How to Determine Cost Behavior
 Cost Function

Y = a + bX
The dependent variable: The independent variable:
total cost being predicted the cost driver

The intercept: The slope of the line

the estimate of fixed costs (coefficient):
the estimate of variable
cost per unit of cost driver

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How to Determine Cost Behavior

 Cost estimation methods through historical

data analysis
 High-Low method 高低點法
 Regression analysis 迴歸分析

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Cost Estimation Example
Garcia would like to estimate an underlying cost function for
maintenance costs using the high-low method. Garcia
feels there is an economic relationship between
maintenance cost and monthly operating hours (the cost
driver), so he collects the following monthly observations:

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 The High-Low Method
Hours Cost
High Point (April) 3,615 $ 23,030
Low Point (February) 3,325 22,510
Change 290 $ 520

b = Unit variable cost = $520 ÷ 290 hours = $1.80/hour

a = Fixed cost = Total cost – Estimated variable cost

Fixed cost = $22,510 – ($1.80/hour × 3,325 hours)
Fixed cost = $22,510 – $5,985 = $16,525

Estimated cost function:

Total cost = Fixed cost + Variable cost
Y = a + (b × X)
Y = $16,525 + ($1.80 × X)
While the low point was used to estimate the fixed costs, the data from the highest
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point could have also been used
Least-Squares Regression Method
It determines the regression line by minimizing the sum of
the squared vertical differences from the data points to the
regression line最小平方法

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Least-Squares Regression Method
R2 （適合度）is the percentage of the variation in the
dependent variable (total cost) that is explained by
variation in the independent variable (activity).
Y
20
* ** *
Total Cost

* * **
10 * *2
R varies from 0% to 100%, and
the higher the percentage the better.
0 X
0 1 2 3 4
Activity
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Regression Analysis
 Ismore accurate than the high-low method
because the regression equation estimates
costs using information from all observations;
the high-low method uses only two observations
 Limitation: the estimated cost function could be
biased if there are outliers
 可用來分析ABC制度下成本動因與總成本之關聯
性
 Costs in a cost pool may have more than one cost
driver; companies can use multiple regression to
estimate costs based on two (or more) cost drivers
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CVP分析的應用--安全邊際
安全邊際（Safety Margin）
• The difference between budgeted sales and
break-even sales revenue
• Indicates the amount by which sales can drop
before losses occur – 安全邊際愈大，發生損失的
機率越小
• 有時會以比率方式表示，以便做跨單位比較

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Safety Margin (Margin of Safety)
Curl, Inc. has a break-even point of
$200,000 in sales. If projected sales are $250,000, the
safety margin is $50,000, or 100 surfboards.

Break-even Projected
sales sales 500
400 units units
Sales $ 200,000 $ 250,000
Less: variable expenses 120,000 150,000
Contribution margin 80,000 100,000
Less: fixed expenses 80,000 80,000
Net income $ - $ 20,000
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安全邊際釋例
 B西餐廳每月固定費用為$120,000，邊際貢獻率為
50%，每天營業額$7,500，請問該餐廳能否保本
經營？
[解析]
 保本月營業額＝120,000/0.5=240,000，保本日營
業額＝240,000/30=8,000，目前每天營業額為
$7,500，安全邊際為$-500，無法損益兩平。

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Using CVP Analysis for Decision
Making
 What sales level is needed to cover all costs in a
sales region or product line?
 What additional profit would be obtained from a
given percentage reduction in unit variable costs?
 What increase in sales is needed to make up a
given decrease in price to maintain the present profit
level?
 What is the required amount of increase in sales to
meet the additional fixed charges from a proposed
plant expansion?

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 CVP and Decision Making Example
Suppose the company expects sales volume to increase by 10% if it spends $500
on advertising:

40 packages 44 packages
Sold with Sold with
No Advertising Advertising Difference
(1) (2) (3)=(2)-(1)
Revenues ($200×40; $200×44) $8,000 $8,800 $800
Variable costs ($120×40; 4,800 5,280 480
$120×44)
Contribution margin ($80×40; 3,200 3,520 320
$80×44)
Fixed costs 2,000 2,500 500
Operating income $1,200 $1,020 $ (180)

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Sensitivity Analysis
 CVP provides a structure to answer a variety of
“what-if” scenarios: what happens to profit if …

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CVP Analysis for Restaurant Delivery
Service
僅提供內用
平均客單價 $400
食材成本 39%
直接人力成本 12%
總變動成本率 51%
單位邊際貢獻率 49%
平均每位顧客邊際貢獻 $196
座位數 200
平均每日翻桌率 4
每日總邊際貢獻 $156,800
固定營運成本 $70,000,000
損益平衡天數 446.43
損益平衡顧客人數 357,142.86
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CVP Analysis for Restaurant Delivery
Service (continued)
與外送平台合作 假設一 假設二
平均客單價 $400 $400
食材成本 39% 39%
直接人力成本 12% 12%
外送抽成 33% 33%
總變動成本率 84% 84%
單位邊際貢獻率 16% 16%
平均每單邊際貢獻 $ 64 $ 64
每日訂單數（預估數） 100 200
每日外送總邊際貢獻 $6,400 $12,800
每日內用總邊際貢獻 $156,800 $156,800
每日總邊際貢獻 $163,200 $169,600
固定營運成本 $70,000,000 $70,000,000
損益平衡天數 428.92 412.74 28
Decision-Making under Uncertainty

 Incorporates probabilities in the analysis

 Elements of a Decision Table:
 Set of managerial actions (decisions)
 Set of events
 Set of outcomes

 Calculate expected value of each decision

alternative

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Decision-Making under Uncertainty

Expected profit of Action a1: 400*0.60+2,800*0.40=1,360

Expected profit of Action a2: 700*0.60+2,200*0.40=1,300
Expected profit of Action a3: 900*0.60+1,800*0.40=1,260
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階梯式固定成本與損益兩平點
銷售範圍 固定成本 單位變動成本
0 – 400 $ 85,000 $300
401 – 800 $157,500 $290
801 – 1,200 $184,000 $270

損益兩平銷售量為何？

該公司產品單位售價為每瓶$500，X5年共銷售960瓶，適用稅率為25%；
若該公司自X6年起適用之稅率減少5%，其他條件不變，則該公司欲維持
X5年稅後淨利，須銷售多少瓶？

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現金流量兩平分析
 當企業資金調度困難，管理者決策焦點在於能否
產生足夠之現金以資周轉時，則固定成本僅包含
付現固定成本（例如：折舊費用並無現金流出）
付現固定成本
 現金流量兩平點之銷售量＝
單位邊際貢獻
付現固定成本
 現金流量兩平點之銷售額＝
邊際貢獻率

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Cost Structure and Operating Leverage
 The cost structure of an organization is
the relative proportion of its fixed and
variable costs.
 Operating leverage is:
 theextent to which an organization uses fixed
costs in its cost structure.

 greatest in companies that have a high

proportion of fixed costs in relation to variable
costs. 31
Measuring Operating Leverage
Contribution margin
Operating leverage factor 
Net income
Actual sales
500 Boards
Sales $ 250,000
Less: variable expenses 150,000
Contribution margin 100,000
Less: fixed expenses 80,000
Net income $ 20,000

$100,000
5
$20,000
營運槓桿度>1，代表利潤變動的幅度>營收變動的幅度
32
利潤變動的幅度＝營收變動的幅度×營運槓桿度
Measuring Operating Leverage
 Operating leverage is a measure of how a percentage change in sales
will affect profits. If Curl increases its sales by 10%, what will be the
percentage increase in net income?
Percent increase in sales 10%

Operating leverage factor × 5

Percent increase in profits 50%

500 Surfboards 550 Surfboards

Sales $ 250,000 $ 275,000
Less: Variable expenses 150,000 165,000
Contribution margin 100,000 110,000
Less: Fixed expenses 80,000 80,000
Net income 20,000 30,000
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50 percent income increase
Proof of Operating Leverage
and Changes in Income
Given:
S = Sales
F1=F0；∆S% = ∆VC% = ∆CM% CM = Contribution margin
VC = Variable cost
I0=CM0－F0 F = Fixed cost
I1=CM1－F1 I = Operating income

I1－I0= CM1－CM0

𝐼1 －𝐼0 𝐼0 𝐶𝑀1 − 𝐶𝑀0

× =
𝐼0 𝐶𝑀0 𝐶𝑀0
𝐶𝑀0
∆I% = ∆CM% × =∆S%× OL
𝐼0

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 Cost Structure and Operating
Leverage (Illustration)
Company A Company B Company C

Amount % Amount % Amount %

Sales $ 500,000 100% $ 500,000 100% $ 500,000 100%

Variable expenses 300,000 60% 400,000 80% 50,000 10%

Contribution margin $ 200,000 40% $ 100,000 20% $ 450,000 90%

Fixed expenses 150,000 30% 50,000 10% 400,000 80%
Net income $ 50,000 10% $ 50,000 10% $ 50,000 10%

Contribution Operating
Net Income
Margin Leverage Factor
Company A $200,000 ÷ $50,000 = 4
Company B $100,000 ÷ $50,000 = 2
Company C $450,000 ÷ $50,000 = 9
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Cost Structure and Operating
Leverage (Illustration)
 Suppose sales revenue increases by 10%:
Increase Contribution Increase in % Increase
in Sales Margin Ratio Net Income in Income
Company A $50,000 × 40% = $20,000 40%
Company B $50,000 × 20% = $10,000 20%
Company C $50,000 × 90% = $45,000 90%

Percentage Operating Percentage

Increase in Leverage Increase in Net
Sales Factor Income
Company A 10% × 4 = 40%
Company B 10% × 2 = 20%
Company C 10% × 9 = 90%

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Cost Structure and Operating
Leverage (Illustration)
 Operating leverage, break-even point, and safety margin
Contribution
Fixed Break-even
Margin
Expenses Revenue
Ratio
Company A $150,000 ÷ 40% = $375,000
Company B $50,000 ÷ 20% = $250,000
Company C $400,000 ÷ 90% = $444,444

Budgeted Break-even
Safety Margin
Revenue Revenue
Company A $500,000 − $375,000 = $125,000
Company B $500,000 − $250,000 = $250,000
Company C $500,000 − $444,444 = $55,556

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Effect of Operating Leverage on PV Graph

40
 Effect of Alternative Cost Structures
 At sales of 40 units:
Option1 Option2 Option3
1.Contribution margin per unit $80 $50 $30
2.Contribution margin $3,200 $2,000 $1,200
3.Operating income $1,200 $1,200 $1,200
4.Degree of operating leverage $3,200/$1,200 $2,000/$1,200 $1,200/$1,200
=2.67 = 1.67 =1.00

 At sales of 60 units:
Option1 Option2 Option3
1.Contribution margin per unit $80 $50 $30
2.Contribution margin $4,800 $3,000 $1,800
3.Operating income $2,800 $2,200 $1,800
4.Degree of operating leverage $4,800/$2,800 $3,000/$2,200 $1,800/$1,800
41
=1.71 = 1.36 =1.00
Summary of Cost Structure and
Operating Leverage
A firm with proportionately high fixed costs has
relatively high operating leverage, high break-even
point, and low safety margin
 High operating leverage
 increases opportunity to make profit when higher
demand exists
 increases risk of making loss in adverse market
condition
 is an indicator of operating risk: the rate of decline in
earnings can be higher than the rate of decline in
revenues
 How to convert fixed cost to variable cost
 Replace full-time employees with part-time workers
 Outsourcing of non-core operations 42
CVP Analysis with Multiple Products
 For a company with more than one product, sales
mix is the relative combination in which a
company’s products are sold.
 Sales mix can be determined on the basis of sales
dollars or sales volume

 Different products have different selling prices,

cost structures, and contribution margins.

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CVP Analysis with Multiple Products
Let’s assume Curl, Inc. sells surfboards and sailboards and
see how we deal with break-even analysis. Assume fixed
costs are $140,000. The following information is given:
Description Selling Unit Variable Unit Contribution Number of
Price Cost Margin Boards
Surfboards $ 500 $ 300 $ 200 500
Sailboards 1,000 400 600 300
Total sold 800

Number of
Description Boards Sales Mix
Surfboards 500 62.5% (500 ÷ 800)
Sailboards 300 37.5% (300 ÷ 800)
Total sold 800 100.0% 42
CVP Analysis with Multiple Products
 Weighted-average unit contribution margin
Weighted
Contribution Contribution
Description Margin Sales Mix Margin
Surfboards $200 62.5% $125
Sailboards 600 37.5% 225
Weighted-average contribution margin $350

Fixed expenses
Break -even point 
Weighted-average unit contribution margin

$140,000
Break-even point = = 400 combined unit sales
$350
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CVP Analysis with Multiple Products
 Break-even point for individual products
Break-even Individual
Description Units % of Total Units
Surfboards 400 62.5% 250
Sailboards 400 37.5% 150
Total units 400

Critical assumption: Sales mix is known and constant

To maximize total income, companies should

increase the proportion of sales in product with
high contribution margin 44
 Example: Multi-Product CVP Analysis
Windbreakers, Inc. sells light-weight sports/recreational jackets and
currently has three products: Calm, Windy, and Gale. Total (joint)
fixed costs for the period are expected to be $168,000, and we
assume the windbreakers’ sales mix, measured by sales dollars, will
remain constant. Additional information is provided below. (Since
sales mix is constant in $, we will use the contribution margin ratio
in the analysis. See next slide…)
Calm Windy Gale Total
Last period's sales $ 750,000 $ 600,000 $ 150,000 $ 1,500,000
Percent of sales 50% 40% 10% 100%
Price $ 30 $ 32 $ 40
Unit variable cost 24 24 36
Contribution margin $ 6 $ 8 $ 4
Contribution margin ratio 0.20 0.25 0.10
47
Example: Multi-Product CVP Analysis
(continued)
From this information, we can calculate the wtd. avg. cm ratio:
Weighted-average CMR = 0.5(0.2) + 0.4(0.25) + 0.1(0.1) = 0.21
The breakeven point for all three products can be calculated
as follows:
Y = $168,000 ÷ 0.21
Y= $800,000
This means that for Windbreakers to break even, $800,000 of all three
products must be sold in the same proportion as last year's sales mix.
The sales for each product need to be as follows:
For Calm 0.5($800,000) = $400,000 (13,334 units)
For Windy 0.4($800,000) = 320,000 (10,000 units)
For Gale 0.1($800,000) = 80,000 (2,000 units)
$800,000 48
Structuring Sales Commissions
Companies generally compensate salespeople
by paying them either a commission based on
sales or a salary plus a sales commission.
Commissions based on sales dollars can lead to
lower profits in a company.

Let’s look at an example.

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Structuring Sales Commissions
Pipeline Unlimited produces two types of surfboards,
the XR7 and the Turbo. The XR7 sells for $100 and
generates a contribution margin per unit of $25. The
Turbo sells for $150 and earns a contribution margin
per unit of $18.

The sales force at Pipeline Unlimited is

compensated based on sales commissions.
50
Structuring Sales Commissions
If you were on the sales force at Pipeline, you would
push hard to sell the Turbo even though the XR7
earns a higher contribution margin per unit.

To eliminate this type of conflict, commissions can

be based on contribution margin rather than on
selling price alone.

51