COST ALLOCATION AND PERFORMANCE MEASUREMENT参考.ppt

The results of the previous question can be expressed in equation form as seen on your screen. The break-even point in units is equal to total fixed costs divided by the unit contribution margin. Rydell’s fixed costs are $24,000 per month. Rydell breaks even for the month when it sells 800 footballs ($24,000 ÷ $30 per unit), using the formula on your screen. The break-even point in sales dollars is equal to total fixed costs divided by the contribution margin ratio. The contribution margin ratio is equal to the unit contribution margin divided by the unit sales price. In the earlier example, the contribution margin ratio is 30 percent, resulting from dividing the $30 per unit contribution margin by the $100 unit sales price. You might want to refer back to the example to verify these numbers. The contribution margin ratio tells us that 30 cents of each sales dollar contributes to covering fixed costs and providing for income. We follow three steps to prepare a CVP chart, which can also be drawn with computer programs that convert numeric data to graphs: Plot fixed costs on the vertical axis ($24,000 for Rydell). Draw a horizontal line at this level to show that fixed costs remain unchanged regardless of output volume (drawing this fixed cost line is not essential to the chart). Draw the total (variable plus fixed) costs line for a relevant range of volume levels. This line starts at the fixed costs level on the vertical axis because total costs equal fixed costs at zero volume. The slope of the total cost line equals the variable cost per unit ($70). To draw the line, compute the total costs for any volume level, and connect this point with the vertical axis intercept ($24,000). Do not draw this line beyond the productive capacity for the planning period (1,800 units for Rydell). Draw the sales line. Start at the origin (zero units and zero dollars of sales) and make the slope of this line equal to the selling price per unit ($100). To sketch the line, comput