Page 112 - MAC4861_2 Costing Class Slides Part 1
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TEST 3 - COSTING
Overview
Application of CVP
• Unit information usually indicates a break-even in units and
value/monetary information (eg Rand or a ratio based on rand) a
break-even in Rand.
• The net profit is derived from the units sold in excess of the breakeven
point, i.e. the contribution from the margin of safety sales.
• The margin of safety % indicates by how much sales volume can
decline before the entity makes NIL profit.
• Sensitivity % for other variables in the model indicates how big a
change can be absorbed before the entity makes no profit.
• Δ in selling price/unit
• Δ in variable cost/unit
• Δ in total fixed costs
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