File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
Lesson FA-20-050-01b
Cost-Volume-Profit Analysis
PART 1b
This workbook contains notes and worksheets
to accompany the corresponding video lesson
available online at:
Permission is granted for educators and students to
make copies and redistribute this document without fee
provided the copyright notice and page footer is retained.
All other intellectual property rights are reserved
by the copyright holder.
_____________________________________________________________________________________________
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
Page 1 of 10
videos for this lesson are available at evideolearner.com
Revised: 2011-05-24
File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
Cost-Volume-Profit Analysis – Part 1b
[Clip 04] The CVP Income Statement as an Analytical Tool
Cost-Volume-Profit (CVP) Income Statement
Total
Unit
Ratio
Revenue
Variable Costs
Contribution Margin
Fixed Costs
Net Income
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
videos for this lesson are available at evideolearner.com
Page 2 of 10
Revised: 2011-05-24
File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
[Clip 05] CVP Example - Determining Net Income
Lanzas Company manufactures and sells LCD televisions. Lanzas Company sold
2,500 LCD televisions in the month of January. The selling price for the LCD
televisions is $800. Costs include $500 per unit variable cost and $600,000 in
total fixed costs.
How much net income did Lanzas Company earn in January?
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
videos for this lesson are available at evideolearner.com
Page 3 of 10
Revised: 2011-05-24
File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
[Clip 06] CVP Example - Determining Breakeven
Lanzas Company manufactures and sells LCD televisions. Lanzas Company sold
2,500 LCD televisions in the month of January. The selling price for the LCD
televisions is $800. Costs include $500 per unit variable cost and $600,000 in
total fixed costs.
How many units must Lanzas sell to exactly cover total fixed costs and total
variable costs?
[Clip 07] CVP Example - Breakeven Formulas
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
videos for this lesson are available at evideolearner.com
Page 4 of 10
Revised: 2011-05-24
File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
[Clip 08] CVP Example - Target Net Income Formulas
Lanzas Company manufactures and sells LCD televisions. Lanzas Company sold
2,500 LCD televisions in the month of January. The selling price for the LCD
televisions is $800. Costs include $500 per unit variable cost and $600,000 in
total fixed costs.
How many units must Lanzas sell to earn a net income of $120,000.
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
videos for this lesson are available at evideolearner.com
Page 5 of 10
Revised: 2011-05-24
File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
[Clip 09] CVP Example - Margin of Safety Analysis
Lanzas Company manufactures and sells LCD televisions. Lanzas Company sold
2,500 LCD televisions in the month of January. The selling price for the LCD
televisions is $800. Costs include $500 per unit variable cost and $600,000 in
total fixed costs.
How much can actual January revenue decline before the breakeven point is
reached?
How much can Target Net Income revenue associated with net income of $120,000
decline before the breakeven point is reached?
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
videos for this lesson are available at evideolearner.com
Page 6 of 10
Revised: 2011-05-24
File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
[Clip 10] Summary of CVP Analysis Formulas
Analytical Tools in Cost-Volume-Profit Analysis
Breakeven Point (units) =
Breakeven Revenue =
Alternatively:
Fixed Costs
Contribution Margin Per Unit
Fixed Costs
Contribution Margin Ratio
Breakeven Revenue = BEP units X Selling Price Per Unit
Target Net Income Point (units) =
Target Net Income Revenue =
Fixed Costs + Target Net Income
Contribution Margin Per Unit
Fixed Costs + Target Net Income
Contribution Margin Ratio
Alternatively:
Target Net Income Revenue = TNIP units X Selling Price Per Unit
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
videos for this lesson are available at evideolearner.com
Page 7 of 10
Revised: 2011-05-24
File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
Analytical Tools in Cost-Volume-Profit Analysis (continued)
Margin of Safety
= Actual Revenue - Breakeven Revenue
(revenue difference)
Revenue Difference for Actual Revenue
Margin of Safety
=
(percentage)
Actual Revenue
Margin of Safety
= Target Net Income Revenue - Breakeven Revenue
(revenue difference)
Revenue Difference for Target Net Income Revenue
Margin of Safety
=
(percentage)
Target Net Income Revenue
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
videos for this lesson are available at evideolearner.com
Page 8 of 10
Revised: 2011-05-24
File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
APPENDIX 1 – SOLUTIONS
(see part 2 for problem solutions)
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
videos for this lesson are available at evideolearner.com
Page 9 of 10
Revised: 2011-05-24
File: FA-20-050-01b-Workbook.pdf
Title: Managerial Accounting – Cost-Volume-Profit Analysis – Part 1b
APPENDIX 2 – WORKSHEETS
Cost-Volume-Profit (CVP) Income Statement
Total
Unit
Ratio
Revenue
Variable Costs
Contribution Margin
Fixed Costs
Net Income
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved
videos for this lesson are available at evideolearner.com
Page 10 of 10
Revised: 2011-05-24