Explore advanced costing techniques such as marginal costing, time management strategies, breakeven point analysis, and formula calculations. Gain insights into sales, variable costs, fixed costs, and more to enhance your financial knowledge.
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Formula BEP = Fixed Costs Contribution per unit No. of Units = Fixed Costs + Target Profit Contribution per unit www.pdst.ie p d s t 2 0 1 4
390,000 236,000 82,000 105,000 1,170,000 Sales (90,000 units) Materials Direct labour Factory overheads Selling expenses Administration exp. 130,000 Materials, direct labour 40% factory o/h variable. Apart from sales comm. of 5% on sales all other expenses are fixed www.pdst.ie p d s t 2 0 1 4
Step 1 Sales Commission Sales (90,000 units) 1,170,000 Sales commission of 5% on sales 5% of 1,170,000 = 58,500 is variable www.pdst.ie p d s t 2 0 1 4
Step 2 Calculate Factory Overheads Total Factory Overheads Variable 40% of 82,000 = 32,800 Fixed 60% of 82,000 = 49,200 www.pdst.ie p d s t 2 0 1 4
Step 3 Calculate Variable Costs 390,000 236,000 32,800 58,500 717,300 7.97 Per Unit 4.33 2.62 .36 .65 Direct Materials Direct Labour Factory Overheads Sales Commission Total Variable www.pdst.ie V.C. per unit (excl. Commission) = 7.32 p d s t 2 0 1 4
Step 4 Calculate Fixed Costs Factory Overheads Selling expenses Administration expenses Total Fixed Expenses 49,200 46,500 130,000 225,700 www.pdst.ie p d s t 2 0 1 4
Costs 390,000 236,000 32,800 58,500 VC FC D. Mat. D. Wages F. O/H S. Exp. Adm. 46,500 130,000 49,200 www.pdst.ie p d s t 2 0 1 4
Step 5 Contribution 1,170,000 717,300 per unit 13.00 7.97 5.03 Sales Var. Costs Contribution per unit 452,700 Less Fixed Costs 225,700 www.pdst.ie p d s t 2 0 1 4
Step 6 Change in Selling Price Reduce selling price to 11 increased fixed costs by 15,000 and thereby increased the number of units sold to 110,000. New Sales Commission = 5% x 11 = 0.55 V.C. (excl commission) = 7.32 New commission = 0.55 Total Variable Costs = 7.87 www.pdst.ie p d s t 2 0 1 4
Step 7 Fixed Costs 225,700 15,000 240,700 Old Fixed Costs + Increase Total Fixed Costs www.pdst.ie p d s t 2 0 1 4
Step 8 New Contribution per unit per unit 11.00 7.87 3.13 Sales Variable cost Contribution per unit Total contribution (110,000 x 3.13) = 344,300 New Fixed Costs = 240,700 www.pdst.ie p d s t 2 0 1 4
