Article/News by: : Angelina T. Agayon
Date Posted: December 1, 2017

Around 23 business students joined the workshop entitled “Cost Volume Profit Analysis” organized by the Dean of College of Business Administration, Mr. Arnel L. Cadeliña MBA, RREA, Last November 23, 2017 At SHC Audio Visual Room 1 (AVR 1).

The workshop started by an opening prayer led by one of the 4th year student, followed by Mr. Cadeliña’s objective why he conducts the said workshop. Mr. Cadeliña stated that “this is a skill that a finance major or any business major should possessed.” Additionally, Mr. Cadeliña said that the purpose of CVP workshop is to combine the three (3) method, analyzed it, used it, so that you can implement it when you are at your workplace.

Mr. Cadeliña said that CVP analysis looks primarily at the effects of differing levels of activity on the financial results of a business. And he asked the student questions like “will the company make a profit in that year? And students answered that they don’t know, because they don’t know the sales volume for the year. And Dean Arnel said that they can work out how many sales the business needs to achieve in order to make a profit and this is where Cost Volume Profit begins.

He gives 3 methods for calculating the breakeven point, where he says that breakeven point is the point where profit is zero. 1st method, the equation method, a little bit of simple maths can help us answer numerous different cost volume profit questions and give the formula (selling price x quantity sold) – (variable cost x quantity sold) – fixed cost equals operating income. 2nd method, contribution margin method, this second approach were a little bit of algebra. The contribution margin is equal to total revenue less total variable cost or selling price less variable cost equals to contribution margin. 3rd method, the GRAPHICAL METHOD, with the graphical method, the total cost and total revenue lines are plotted on a graph; Price is shown on the Y axis and units are shown on the X axis. The point where the total cost and revenue lines intersect is the breakeven point.

Mr. Arnel Cadeliña also discussed the sales volume required to achieve a target profit. Given the formula of Number of Units equals Fixed Cost plus Target Operating Income over contribution margin per unit or contribution margin per unit. Using this formula, the management will be able to know the operating income they want to achieve. Revenues minus Variable Cost minus fixed cost equals target net income over (1- Tax rate), it is the formula needed by the company to know how many units they must be sold to get their target net income.

In any business, or, indeed, in life in general, hindsight is a beautiful thing. If only we could look into a crystal ball and find out exactly how many customers were going to buy our product, we would be able to make perfect business decisions and maximize profit.

More News from SHC...

More News
Article/News by: Stefany Ann Margaret R. Maligat
Date Posted: JJuly 20, 2018
Article/News by: Denzel Avery G. Villaflores, Aaron Cameron Paez, Eloisa Arambulo, Jedfrey Napeñas & Aizza Marie Briones
Date Posted: June 13, 2018
Article/News by: Prudenz Yleizer G. Lorredo I
Date Posted: May 29, 2018
Article/News by: Lanilyn B. Diala and Danaver G. Atienza
Date Posted: May 17, 2018
Article/News by: Kristine Mae Basilio and Dean Arnel Cadeliña
Date Posted: May 10, 2018
Article/News by: Denzel Avery G. Villaflores
Date Posted: May 8, 2018
Article/News by: Angelina T. Agayon
Date Posted: May 2, 2018
Article/News by: Angela Faye M. Baldovino
Date Posted: April 20, 2018
Article/News by: Darah Maia T. Mangabat
Date Posted: April 12, 2018
Article/News by: Rupinder Kaur Barar
Date Posted: April 02, 2018
Article/News by: Angelina T. Agayon, Denzel Avery Villaflores, Monica Paola Noscal, Rea Landoy, and Kimberly Talisic
Date Posted: March 8, 2018
Article/News by: Ms. Angelina Agayon
Date Posted: February 13, 2018
Article/News by: Ronualdo L. Revilla
Date Posted: February 10, 2018
Article/News by: Lucia Yllaine P. Ramirez, Grade XI-ABM 3
Date Posted: January 26, 2018
Article/News by: Angelina Agayon
Date Posted: January 22, 2018
Article/News by: Mark Rosales, Prudenz Lorredo, Zhen Herrera, Eloisa Arambulo, Kristine Mae Basilio and Angelina Agayon
Date Posted: January 20, 2018
Article/News by: Lemuel Harvey C. Reynoso
Date Posted: January 18, 2018
Article/News by: Jezza Manuelle B. Zoleta & Alvin G. Borromeo Jr.
Date Posted: January 17, 2018
Article/News by: Babe Aubrey B. Gabule, MICB
Date Posted: January 17, 2018
Article/News by: Rupinder Kaur Barar
Date Posted: January 16, 2018

1 Merchan Street, Lucena City, PHILIPPINES
Tel. #: (042)710-2505, 7103888, Fax #: (042)373-424
E-mail Address:
© All Rights Reserved