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Differential Analysis (follow-up)

Tapos additional tanong po, tungkol naman sa Indifference Profit(Medyo naguguluhan parin)… Ang tinuro kasi samin eh basta change in fixed costs/change in contibution margin = units with indifference profit.

LXQ Turo-Ruro stores are open for 15 hours a day (from 6am to 9pm). It sells packaged meals a price of P40 per meal. Variable cost per meal is P30 while total fixed costs for operation of all the stores amounted to 200,000 monthly. It is thinking to reduce its store hours to only 12 hours a day as this would reduce fixed costs (utilities and wages) by 6000 a month. It is expected that the reduced store hours would result in a loss of 1500 packed monthly sales. The reduction in store hours would result in ??????

Answer: a prospective increase in monthly income of 45000

Malamang TYPO error ung 6,000 a month it’s supposed to be  60,000 a month

Indifference  profit is synonymous with breakeven point. Yun kasi yung profit na “Indifferent” ka, meaning to say “okay lang” kasi nabawi mo naman yung costs mo.

Sa differential analysis, lagi nyo dapat hahanapin yung mga RELEVANT COSTS ito yung mga costs na maiincur pag nag-iba ng operations or may ginawang pagbabago ang management ika nga, “it changes upon a change of decision”. Hanapin din ang mga INCREMENTAL REVENUE, ito naman yung increase sa income mo pag may inimplement na change.

Example ng relevant costs, assuming may change na iiimplement ang management (wag imemorize, sample lang to)

– increase in fixed costs

– increase in operating costs

– decrease income

– increase in liability

– at kung ano-ano pang pedeng magpaincrease ng costs mo pag nag-implement ka ng change

Sample naman ng incremental revenue

– increase in contribution margin

– decrease of costs

– decrease of liability

– increase in operating income

– at iba pang posibleng makapagpataas ng income kung iiimplement ang change.

Sa problem, ang sabi, pag nag-bawas sila ng oras,

Magdedecrease ang Fixed Costs nila ng 60,000 per month – incremental revenue

at mawawalan sila ng 1,500 units ng sales – relevant cost. Bale ang effect nito sa Contribution Maagin So, 1,500 * 10 = 15,000


Incremental Revenue of     60,000

Relevant cost of                   (15,000)

Incremental Income of 45,000

Kung papansinin nyo, ang pinakealaman lang talaga natin yung changes in costs and changes in income, kaya nga “differential analysis”

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