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Module 4 - Marginal Cost

The document discusses the concepts of marginal cost, variable costs, and contribution margin in relation to production and profit analysis. It emphasizes the importance of understanding cost behavior and break-even analysis for effective financial planning and decision-making. Additionally, it outlines various formulas and calculations for determining costs, profits, and required sales volumes to achieve desired financial outcomes.

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2 views24 pages

Module 4 - Marginal Cost

The document discusses the concepts of marginal cost, variable costs, and contribution margin in relation to production and profit analysis. It emphasizes the importance of understanding cost behavior and break-even analysis for effective financial planning and decision-making. Additionally, it outlines various formulas and calculations for determining costs, profits, and required sales volumes to achieve desired financial outcomes.

Uploaded by

taiseenm8
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
—~ = Amount ol expenses ncared Aa Sn predtucieg j geo and yeavies as known an cat Tednetquns a proce 4 Onurtoielieg Sh catieg. d x CEL The Setting CAE & WEL Accountants Teetfa (TE cwa) dallas’ marcinal cost ax, the amount at any given Wolume output by erie ta cotth one changed OL dhe ols 4 aggregsts cots one ngect Sf ieee icespes Sy Snorored drorared Py one at To anertein | othe manrafioat Cot , We nad the [pies elemectts cae Rivet Labour 2 Rivet’) expenses & 3. Total veiabl overheads x Hondinad cost = print Cott + Total vattabls overhiads \or> * Moagtral cot = Total cott- Fhad Cost nol Cost ‘ eat cating eth Ayfrach by TewA as, The ercertacment bd ol heren cating mMaxgroal esit and athe dled on profit af cheanges Bn volumk B dype gf output." to Ar Vite pny" ta ‘ Rete antp, le _Aednatayut of datuvnintg ths Stat . an iG Sqqrqet ett aus te an 4 ; T | Ons ae Sven dhe eniatiing lavet Proct =< ec | Acc&al NL AR such St athe i. Preducaon, ae Adora — Garcame nth 4 oudput Ys __ Batt aye oer anginal Cob tir 4 Soyo | cove accountieg tohicn = “pays S Ape cfal attenth,, / Se She behavfour edt oo St wstth Charger Gn Bho role I output. Features 4 oak CoA tera | om t = et One OC Mechta cl cating kis h SA wed n> confiretion wth othr edd carting . + tt a Flud & VoSabls cots Ore: opt? veparatlt ot eve ee Semk- voototla -ceth ove dad veperated dat past and vartobl. components. 3. Oy fed Cots axe pertod “Cot, uy are oes product cost A Cost voles %, antag 7 vervable acti. CoS re Connclavect ae Sn Ke ct 4 produ i oS Sed ord DAE th ts winin valucition af fintstud goed so dakin Brite account, only variable Gestion ay Snavowed & Snductect. a Sed ets, they ave changed — . Oe [trek cd are period ches. Ny UN — PEL accourt dug she Poa & Socuwed » Way aye not Lyeors — Sreome he. serene beroen “he. contribution arch find tS gw ae opt profit a dew « q 3 » Coad cost remaian constant drrepecive wey: 4 Tre Level qo ‘Solu pu onc Verabu cAt ge unit wma She tart . = The CASE ~ Volume ~ pratt velottenship on fodty employed to_veveal the state 4 profitarditty ak Various Uuvels ae actiAty. Advantages Ee Hoy goal Giticg: fs * Comtant Sn Woture | lective Cot Contsol Lo + Treatment q overheads wSenplefied Un and realistic wwalwation Hetptud a Pranagenunk - Welps Go production planning Better (lanns) reults Foxotion 4 welling price + Hetpfut an Phulchepcthg contzo ( |_ PLS IHIDRID |S |W Iw Is tr Preparing ctorclony: [Me “Make A Buy ductors [2+ Bettey presentalton Aurdctvantager 4 rang ral editing © 1 AR Reathy Bo cralysteg ovevhtadds, DeThent elomant Sqnaecd } | & AMRuly S Rxation af pte. Compete Enfdenatian pot given 6 sq Teant eoXt | % Probes Ol vartabls overtracts. | % flu ATentid | Se _Vroaliabu tock evaluation | LO- Crain Ya Mow 4 Atoule “|| Me Atckomat ion: . Abusption Cortirg.* f he Ses Rtutt Cost &e_ Managemet Pecouctants Crerta) datas St oa th prada 4 chang alt ci , beth variable & Read, te operations, proames , 2 prodacdas Th mag iret Gait , erly Warlable catty are chongedt to produ Vv Y | x GNt__ Equaticy Tr Salta = vantable ot 4 load cat + Prof [tess - 2+ Satu, - Vestable cost = Fhad catty Proftt | bows : 3. Sader -Variabls catt = Conttputian te Contrtordion 2 Rack eoht + ty ce 7 loan ors Ste trevagicaa’ cost al Cont button Gs ths salere nes torte = Cocte'n: US wr to rack Tech cc, Ord ad ahivution os _alio Kroum an "Gece athe mt: i _ one uae eo, are “covered by ahs | contrtbution, de kemsiintng ohana Ga ackdich to the nit pelt: kay Famulas” a - g - = Rook cat. E Prime cast +t Yorable Overbracts - Contbulton = Sols - Hoagtnal Cart | fontbutten =, Sales - Varinblt cot rele = Cartyibultion - Shucl cost ve 3 te Contibulfon 2 Fad cat thr it] tow a 6 Salts MO 2 Bina “Cost + Proltt : o : I From dine atising. Enlarmeition Sack out the pope eannsc duerg: She usu qmancinal . coving ctechaiqus- “t Speese diana pete ey ae Cine edt = £580,00'0 setting pete x output lve! = IV,50,000/- Sak edt = Variable Cot % output evel = 19 x 150,000 = 15,00,000/ —Y Comb Rutten = solu - Rrallcat : cadena iaecs : j = _4,50,000/- — Profit 2 borilytputton "= feck cot + 4,509,000 ~ §,00,000 _ Poof = _2,50,000 Even Bouat ~ even pout and brea even hast art two mi products of break - cn er alll To — wrene Gk” feonwmned | ust break-even’ yint an Bn ia ota pense, Sk Sk Coneeened with break ey, Chet: Borak- even arakipis Ss alg “knolon as C&SK~ Volurnt - ‘Poole Coxe) aratyp's - he anaky spor Ss a took 6] Krandial analy sity dhe Genpact on pete dhe cf Bn Volum, pre, eet ard mix can be timated | with - Seaorable oceuvacsy- The Barak -even “pant as cc eqttibtom : potrte A Balanctrg Yotrt of re profit, no So. HE, ds) a paint ok which sows Ceased ond. pref begins tour “Qneome dy exactly equal to expenditure’, by ahs jee cto’ coleadate BEP ws TEP can uth) = Lokal PRA CHE >. BER = Fteck cost Selig Rox por GRR NE per att oc Bom “tne foliar Cabatat GER. vartarbl cet per i fate = On VI, Setting Poder per uit ~ Bu. ta). fea \ a expense - &. 60,000 |- 7 eae | =_—Y a ee PBEP ign wh = Fad cot ! ons settiog ort per Unie = we per nik | poe 7 — “j-— | | 69,099 ~ 10,000 | oo ‘ 2. BER USn vader) > 1,000 KF a - = 18,000 | — @ A __ company extimnotis » dhe « note Sk WU earn & profit E 60000 » Tre. budgeted rudd cat arch vols or ZF 250,000 and = A A3,000 wer pectivelly End out BEP ds Cornpary.« =Y fo 93, t t £ Te Rud cast_x Sales ¢ BEE eon wah posi ae towns] contit patton — Corthfioution = ruck codt + prolte = 250,008, 4,50,000. =, 3,009,000 —7 BEP = 250,000 X 4,%3,000 300,000 t 2. BEP = = 3,24 500 /— x (4 Fromm the jpltnasing partiatos , fee out reltirg pea per antt 4 Bee ds to wee _braugnt down te oo unity. > i : Vaxstabls cat per unit 2 BxS(- Poach Expense ~ S a70,000 |- Setiirg Poxtes per unt - % joo |- Sala ake olictfan , hee Us qneunt that cates at BER cater 4 Qoo0 unt kh. on | eee. tut cat "> tentrt bation per vance RONG STOIC ox x = 30 Contibution | pete unit Js. 30 [- . seisieg PRU vuhoulcl Nave bern dos Ce, A+ G) | crom tru fotloustng cateulate EP. Exprew So tov units ord also mus BEP a weilirg pra deduicd by Wl. | . Fras expensed Re plasiation’ -'(00,000 Soloriers - 100,500 Voriatals excpenies Motivtal - = 3f- Aobour -— = 2)- coms ¥ pra - = tol- BER) = Clack Cd Contibulfon per unit = _2,00,000 o- (342) =) 40,500 2. BEF = 40,0007 & wattan vedling pete Sener! by lof. SP vetoma FA (to-1) & Contibution -F Ul-(a-5) TT napE Volume atte [rly aris ee. Prolt -Molurt votlo | uskten = Sa popular os PIV valle LEPYENe, As = noun ru lattonuhip ee do ality. Another farms [a A voto ok Contiloution alr! ratio a rrengos | Aacomns Sec tales Be VORolb. ies Val Ths ratio Z. Bs expremech an fees 1 Srekicatra ahr aahative Profeawity Bu Ser produch, epee F computing pl valRoligiven below: 1 Bly vale 2 CARR BURR | ® (00 ng S08! o4 Sous = = ties Renin @ a. Plu rato = Pad cat POE x 100% oy Sas 3: Plv volo, = SHMANE YY (50 Sais sat Cech cast BEC (hatin® valsteal -= a : Ply vottio The proftt fi Dutra can be Snoaed _ by. Senproving PIV yaliece A uch ,. coslecemest wR onde: Ayes to Smprove dhe ratio - A Worur dralo mons gpuctie proftarR ty and Vicevemnra- So G/B, Srorare Plwreitio Dy _Snovasieg seising. prick “per uct & F Aaciahtnig sotalol» cast ReWounk pre itae S| rose ati oo igh el a BER a RRA east VIv anatiro Hee, * L— Sols required 7 So unity to. ceckatain «| dated cs; Ah H4 = Coad coh 4 Dertrech Profit P[k ratio ’ or) L Raqusredl “cant oution ’ en A : New contribution «per unit Contribution = Saln x. Ply. ratio VoRole cat = satu [t- Ply ratio} oa Ply datfo = charge a, proftt % 186) a : aoe an soln * : Seat cAT = E2Yoo!- , Aeliing. pra == 3000 |- Coladot PIV dakio ; = = —— Div nalto = Genbtbubtod oy) ; Aol, tonbReution + Sala - Modinal cot © %z BQO - AYoo = 600 Plv. notice. =~ 600) 3000 Kd = 30 ths @][Th Solin” tuwnever and ways Sag 8 pouse ort od [piiour 4 Perrot 1: Salis ~ EF 210,00,000)-& 7 Prot - E 2r00,000/- se Per®odk 2") Sales ~F 30,00,000 b&e Propet — FE 400,000 |- | Cabuulats Ply roto. t =v) Ply note = le Sn profit Grange Sa Arabs Proltt = 490,000 - 2,90,000 KALCO = 2.g0,000 > Ply ralto 2,00,000 <> RNa: “S Balss, = BB,O%OGO = 20,00,000_~ 10,00,009 KI00 10,00000 U* gean | 2° Yeon 80,000 + 40,000 are obtainuch porn dhs recdds > 10,000 14,000 range. fo Kole eel = iWoos — 10,000 = Yooo Sosy = AO,000 -80, 000 _ =. 10,000 = : Pr sotio = 4000 p66 = os (0,000 Flud cat = conbipulion — poof 13a Lortetution = satus x Ply rato = 80,000 40°/. = 32,000 Fuad ca&t = 32900 = [0,000 = QA, OOO BEP yatiay = DRO Ree GO SEP (patss) = 7,000 I- ST Ippon reTePrer rr rrerrrreree ree reate rater eae tert tts @) Hou ant (nguuivect ‘ho ete ee ER = cane. ee. Ge ah year oe 80,000 L- aay ds E UlS bittmatrdh alr a ig pesto amr value at 200,000] - “The ne f : anit Snvelved vot athe expected t Wolin, of oukpuct + each ants Aad at £ 20 Gludot GEP- =r Portcudarr Per unit Totok Sas 20 2,00,000' | Vorfatoe cot 493 i4o,c00 | ContRuttors 16 (20-4) | 1,60,000 | FTadk codt gee r 80,000' || Prolt t gk | BEP = PMA CHAT X MLS _ 30,000 K d,00,000 dekatiacee lose eee SLAVE, - 200,000 — &0,000 ~. BER = [00,000 /~ : wry wep = FC Ply rato, PV dokio = Conk button A\OO wad, es SG0,009° 00 200,000. : ws Plvastio= 807, “TEP = 80000 wT = 400, 000/— > 30,000 Seltieg pra - ve. 2o-G oath engin 4 Sality (Hos) + Mongin Senp&tant | conapt "an approach: ‘Total wales minus. dir! Bren Pott (Bee) Ss Enoum con Kha margin tek Sy) the * vs Aha excun of __ réienal. Racial rales cover tol at BER. &__ gn crangtn El salety Sndtodtas ah. Sourdavn j= buawwn becoune ever ucttin a, substantial pat ° roby BL proclucdifen | some proftt shal be mack. Smad margin 4 Von dh hand oh, an Undicatd o o weok podttion Oo bute, a, even a Amall reduction Gn Asis ad production GRU actvensaly Wert She _proltt postion othe ousinw. Meorato ws can be Snoware d by : * Reouosing She fad eat * Reovoring athe vartabla cat A Thoworieg the seltticg Prin (se) | * Trosantog- output and rots Lf ~ cron aha product mix ‘to Soper ake Plyratto. Tx mos = Acual satu. ie Mos = froity tf Ply ratio . o Satay ot, BEP cm jpucsiog: acta, fot out Ply Jattio. BEP & Hos: ‘SaltA - 100,000 !'- Wetal cadt - 80,000 !- Fad edt --Roo00f- i Net pelt 20,008 |- = of PIV oaks = BARE ee VE = Total cot + Mud Cat = 80,000 —20,000 = 60,000|- Plu xolho: = 100,009 - 60,009 . YO. a = (,20,000 2. Plurotio= Yors” - Ber 2 ee = 29999 = 50,000 PIV roto oy. _— Hos Proltt . ‘ 20,000 = 50,000 — PU rato 4OY — 0 he pottousieg Saldmatton war obtotnid war Company » Sales = 1.00000, VE = = 60,000) 6c = 234 Ferd dhe Ply nolo | BEP & Hog. a —— aa ea ow mato = SOMA“ VE ae alee we Satur 1,009,500 4490, {[ = Wot ae _ BEP = a 29,009 =_45,000 ]+ aa Ply ratio OL —— | mos = Acisol soles = Bee sal “ = 100,000 - 5,00 = 25,000 |- e777 The v—_plossg Jn, imotion db obtainech pon oO. Comnponyy - 20,0d0l- ve - (0,000 |- Ec - 6000 [- Find out Ply rdkio, SEP A NOS OF Bian vel ancl ok dhe spect fptousig am) 210". ALosarti Sn FC bv) ol, Bowosieg. Gn FC vid oO) Wh ALoOiartnr Gn ove. A) Atl. Anorak Gn setSirg price. / 2) io}, Inosare Bn se together weth an Snowe 4 fesdouele es ee ZX wLoo |- ’ 4) tol, deorore Zn SP _@ 10 Aeouare Zo SP accompanied by ‘lo"k ol orase Sa ve. owe) ‘ =|] Ply ratto ContrbUtion yigg = 10:09 x 100 = 507. Aol 20,000 eee = FC = 8902 ~ 12,000 v Rous BOT. Hos, .=, Auanak poles - BEP Aakus =) 20,000 = ¥a,000 =3000} a) By cuouare sto Fad Cost | ooo x 207.) = 1200 Ply antfo = 50'/. —y 6000-1200 = Boo). : BER co MUOO 2 a600(- ___— — . 501). oe, HOS = Q0p00 -.AGOo = 10,400 I~ —_ . [bi] W0', Sncreare Gn Pturk Cot 7a | ooo K10'/-) = 600 = 6000+ 600 PV rato = Sofi : gee ‘= 6600 _ iz,200!1-" 307. Va he ’ | HOS = 20000 -13,200 = 6,800 [~ i GJ tot droume Sn Vaiable edt: z 1 - a+ | ve = W000 KI07) = tooo Sy 10990 - 1000 = F000 u Plv rolto = 20,000 -%000 At, 00.0 Kd = 55 /. iT 20,000 20,000 ‘ i; SEP ze 800M > _ ooggg'fc Ree =a Mos = 80,000 = 10,909 = A091 [= A} lO) Browne Fo Kets price - SP_= Q0,000 x 19.) = ROVO = 2,000 +2000 = 22,000 PN Adkio ‘= 22,000 -) 10,00 0 Q000 Rind. Sk — 7 rt ~ 55h 2a,000 22,000 = 4000 = = oq - ss 7 oq! BEP fo R000 - 7 : O00 ~ (0.909 = Seppe ited Reece HOS = e) 107. Snonane once ~ of 0,000 KLO'}) 100 Sn GE > 200 =, 5 S =, 90,000 44000 > 5; 6000 +1300, = 4206 33,000 4,000 - 10,006 58 /. . | Mos = 28000 - \30a9 = BXIo]- ae op lol. aoe. cay? ‘ — = 0,000 K tof) = = 3000 = 20,000 —2000 = 13,000 }- A 2 \BjO0O" =10,000,, _ 8000, guy, . \8000 (000. BERL 1a 280090 warts, esel< aT MoS =.18,000.- 13636. = Us64I- qi toy, drome Sn SP & (0'/, dacvase Sn VC- SP = (AD,00.0 K 10%.) = JOO == _BO,000 ~ A900 =18000)- wiles ye. = hoooe x10 1.) = tooo =~ 10,000 ~ ooo = = 9000) Plvsatio = 1GOVS-AOOO _ 00S gg = SO/. [3,009 {8,000 : ecp = 6022 -=\9,000/}- 50%. i Hos = [8,000 - 12,000 -= 6000 |- ew i 7 aoe smn Bowat Even Chart | aad I The dechniqys 9 Burak fuer Prated, > || be madks cory sith dhe uke of graph & tralbens | Bérmuta Graprical suprrerta tian Of Boat even ea, SNOT they (nr Cok -voluent - pro) ft) dx Enoum os bral - Bh offidon Ahad! STE dy eth otal cote ang ie Yous at wat volume dhe [irm Jest covers ay 7 CA URNA Venus ol break-even 2 ‘ | | Oadak gavenday ak ole erent volumes poration = BEC unos he proftavt tty & otuusise an Lrcustatting “et vesfous Wels of activity ard Sal . ra point et shih nutter profit nd. Des Si wads Breat-even potet Gh tnoum as “no BrO|E (mo Len peut! So dha oath ui altho’: brown wih * ‘bata —dven chat. a Beis point, che total cath Ort reoverecl and prj begin. “ ‘ i Sigkkeancs | BBG ok Norio kevela a Actiity | Vs Te RU seus’ dhe Vefable edith : fea edt acl fetal 1 Sobsn unit & vats can be Enoion _——" Peal a SoM can be enoum a 3 Gr Hoorn Can be noun 5. Ange 4 Sn@olance dhe Fritere clon 4 vols wth Coty Bre Can abso be knousin . a — wth, 1 St re very relat a ae a al cleanin” Steal Ja managetat oud | & buen Chast Assureptionn of Cova pen 1. Fuck c&ty cemrain dhe sara are do cot dort charge u ae a a urth le evel activi. ae Oo 4. “? 7 D Cot ave Adid Frito [ud e& vomtabl cats aaa Vestal: cate charey maiding a yrs q production - Be Voxel cath voy uSith tw volume 9 opt ee phe of Varta catty udh A Wage ral, Ra 4 - moles, suppliers URW Re LEnchay . ps l| ° 2 2 ty Settieg | PRG Amains ah Ao odhutty | 5. Thon aa me “Change Sa.) dhs produck ofa. Guthere Sh ve charge Smitha veh ffierey. % Roliciean of: pranagemest), cto not chang procm ch clus ‘te me ot ctiflerent lareds of “[e. No crane dn manufadherteg wal oee operating siyiceney- Qe OH © Kins = aoe suntt, produced and sold we the Dare, chine Ga ne dtaSrgs & epenteg, vdeck + 7 + Advantages 2 Bowok —even Srokeys & creat: & [feat Ct Can be Aitermninsd- Le Toko Colt Vortiabl& dst DBE outpuk A veles vole can be cactusminch . & yeloitZonuriiip con be Abacttedd , arct 3. Cot, volume 2 prot Sra ave Vergy wales Ko thE raragertal uBio, ty Tedtar. [fern Compariston oe porno. - ST ae ol [oe Jaucostieg plan & prc. v = [Link] pest produc mix can be xrelsctect I. Torok aa can be calalatri d- 8 Profttadbt ant uve qf adevity , varous volt eb? 4 si q ty BEC. Gs) conntruthd Ueda ore errualintic eee J exact and acturate clawt[rcattion feat ante i ard vaRable Gi not patos. Karl cash v beyond. a Garten “evel BA output .. Votabu. cet “per ut: Uk Contant ano St wentes do propiti, fe dha volume. 2. Constant Ring prea Sy rot tru, —s ZB Deterilech Tn} dation cannet be Enoumn’ fer dhe chant Te Crewe alt the, Cafderation abost jot cats, Vertes) Cotte pSosetitog pita, a seemed chroot, erase tea. Altassoett i | ye Neve Smpitana Fy: even te rogentrg & ctaleg st | 5. MtorXouy produd&y imix on profit: cannot be stadia On Bt tx Kh conarnd ust omy ee an & _prodlvot mex, 5 6. Cot, une 6a profit velaiiona rie tan be Kron} Capital amount , wiartet ‘arpects | spect of. 9° oom vy poBuy ete vobfcn coe Separate {ge eae reat cannot be ConRclavedd fom: e-c. [Link] dhe bus cohtPilons © athe BEG becomes out ro charge Sn BUtn condita ., Fron the feressiray Solrmarion , chadal BOP keg B.E. Cc: Sellivg price - FZ 4ool= Variable cdst | BEP (ia unc [Guactity) + Frac Coat | rata Fiand iaseis Cont button, cat CCE Yoxinbly = S45 2408 Tentabution = Satur: Vatable 6st : Goo, = (ue + (00 + 9) Cot = 10,000 = W6o Bere = _6000° = BAT unity 6 BEP Cat yale (volume |Aata) = BEP reunite) x Seitrq prtce = BI5 x Yoo tt = 1, 50,000 |— eke i it,Nolovs 2 200 4 i 7 ‘0,000 $9000 tixectot —SHargin of Aalety— ; Se sieges a Te 4 — unit lauantiey From the Jotiowsteg j So] maton, 1 caleakaty Be BEC. a Setlier peta = Seo /- Varia C&t = a5 risasy Condviloution Prt Vorfatle Cott: — ees ——| SS ge S Ua) 4 35 . 4 BEP ates) Aakiy) > “BER Wanita) XSeltirg prt = 45 Xp + Hl = 400 /- ao to 20 30) YO UF 50 60 Hs vais Vateg ht — Loltara%er “inj b BE. Co method ete prea = 2 50 |- Vortabte Ct = 36). Rlaud cdt 2 49,000 | - olcasate 8 6 p BEP (Sa unity) 2 Fuck cast Candi putfon, ——, Sti bri mec Varah coit= 3000 x%0 > 50 -36 sien a BEF Rutty eset socetee 20 Bee ta Voliats] Alia) =) BEP (urtityy X Ses 9. trea = __a000 K-50 = (90,000 /~ + g x Ze f al | | i A \ | “ : Fraud cart Mas 1 = rreagir of safety — FOO (000 (500 2000 7800 4000 BsDe 4000 « ee, (Ce) ‘Aral Tracetence > DL 4 6 oe a : The ange te SR the tnt gf __foeak Saterectiag Ake salu tine ain Sk ena an te Ae Snicheners i a 4 TH Gratien he Rt ecasirg, capacity” Whe onal i] rey be dege & Amatt. 4 greater angie Sinan al mans dkhot athe profea are made at igh date Ry Colt ‘ and Ra vasa. Ok Gemally a darge & Wide angle Ankence teeter StH a igh magin 4 obty ncticates othe radkt \pvourabse urtuation .

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