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ACCA PM本量利：Multi-product profit–volume charts
文章来源：ACCA全球官网
发布时间：2021-09-02 17:41
阅读：1081次
Multi-product profit–volume charts
When discussing graphical methods for establishing the break-even point,we considered break-even charts and contribution graphs.These could also be drawn for a company selling multiple products,such as Company A in our example.
The one type of graph that hasn’t yet been discussed is a profit–volume graph.This is slightly different from the others in that it focuses purely on showing a profit/loss line and doesn’t separately show the cost and revenue lines.In a multi‑product environment,it is common to actually show two lines on the graph:one straight line,where a constant mix between the products is assumed;and one bow-shaped line,where it is assumed that the company sells its most profitable product first and then its next most profitable product,and so on.【点击免费下载>>>更多ACCA学习相关资料】
In order to draw the graph,it is therefore necessary to work out the C/S ratio of each product being sold before ranking the products in order of profitability.It is easy here for Company A,since only two products are being produced,and so it is useful to draw a quick table as see on the spreadsheet below(prevents mistakes in the exam hall)in order to ascertain each of the points that need to be plotted on the graph in order to show the profit/loss lines.
The table should show the cumulative revenue,the contribution earned from each product and the cumulative profit/(loss).It is the cumulative figures which are needed to draw the graph.
The graph can then be drawn(Figure 3),showing cumulative sales on the x axis and cumulative profit/loss on the y axis.It can be observed from the graph that,when the company sells its most profitable product first(X)it breaks even earlier than when it sells products in a constant mix.The break-even point is the point where each line cuts the x axis.
Limitations of cost-volume profit analysis
Cost-volume-profit analysis is invaluable in demonstrating the effect on an organisation that changes in volume(in particular),costs and selling prices,have on profit.However,its use is limited because it is based on the following assumptions:Either a single product is being sold or,if there are multiple products,these are sold in a constant mix.We have considered this above in Figure 3 and seen that if the constant mix assumption changes,so does the break-even point.
All other variables,apart from volume,remain constant–ie volume is the only factor that causes revenues and costs to change.In reality,this assumption may not hold true as,for example,economies of scale may be achieved as volumes increase.Similarly,if there is a change in sales mix,revenues will change.Furthermore,it is often found that if sales volumes are to increase,sales price must fall.These are only a few reasons why the assumption may not hold true;there are many others.
The total cost and total revenue functions are linear.This is only likely to hold a short-run,restricted level of activity.
Costs can be divided into a component that is fixed and a component that is variable.In reality,some costs may be semi-fixed,such as telephone charges,whereby there may be a fixed monthly rental charge and a variable charge for calls made.
Fixed costs remain constant over the'relevant range'-levels in activity in which the business has experience and can therefore perform a degree of accurate analysis.It will either have operated at those activity levels before or studied them carefully so that it can,for example,make accurate predictions of fixed costs in that range.
Profits are calculated on a variable cost basis or,if absorption costing is used,it is assumed that production volumes are equal to sales volumes.
Written by a member of the Performance Management examining team
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