管理会计双语人教版-Chapter-05.ppt

The margin of safety is the excess of expected sales over breakeven sales. The margin of safety is, therefore, the “cushion” or drop in sales that the company can absorb without incurring a loss. Managers use the margin of safety to evaluate the risk of both their current operations and their plans for the future. Exercise 5-20 allows us to practice both breakeven and sensitivity analysis. Country Road Driving School charges $230 per student to prepare and administer written and behind-the-wheel driving tests. Variable costs of $70 per student include trainers’ wages, study materials, and gasoline. Annual fixed costs of $112,000 include the training facility and fleet of cars. The contribution margin is determined by subtracting the variable costs per unit of $70 from the selling price of $230. The resulting contribution margin of $160 is divided into the fixed costs of $112,000. The breakeven point for the driving school is 700 students. In situation 1b, a “what-if” analysis is prepared to see what happens if the sales price is decreased to $200 per student. This would decrease the contribution margin to $130 and increase the breakeven point by 162 students. In the third scenario, what would happen if the school could decrease variable costs to $50 per student? This would increase the contribution margin to $180 and lower the breakeven point to 623 students (always round up). In the last scenario, we see what would happen if the school was able to decrease fixed costs by $10,000. There is no change in contribution margin, but the breakeven point would be 638 students. The fifth learning objective is to calculate the breakeven point for multiple product lines or services. Most companies sell more than one product. Selling price and variable costs differ for each product, so each product line makes a different contribution to profits. The same CVP formulas we used earlier apply to a company with multiple products. To calculate breakeven for each product li