>>> > Hi, everyone. We are back. As well as we remain in a very, very crucial topic

on Chapter 21 of costvalueprofit evaluation. I was speaking to several of the trainees ahead of time

and you ought to consider accounting sort of like getting a suntan. It'' s a whole lot better if you do it a little

everyday rather than try to do it in one chunk, alright? , if you simply take even on the days that you

put on'' t have written homework, if you just take 10 or 15 mins to evaluate what you'' ve done, go over it in your mind, you will be stunned exactly how much less complicated it is when it comes time to

Okay. I ' ve taken guitar lessons as well as he says it ' s. so much better to practice like 20 mins every day as opposed to 2 hours in one day,. You people are getting much sufficient along in.

So I desire you men to start working with that. Because, make sure you ' re doing this homework. it'' s truly crucial, all right? Allow ' s proceed as well as take a look at the research. Prior to we do, I desire to advise you on those. that Phase 20 job.

You people at residence, I won ' t go with the. whole explanation once again however there ' s 3 ways you can hand that, or get that to me.But see to it you ' re doing that.

See to it you'' re checking the schedule on'. D2L, regarding the last day that it ' s due, I don ' t desire you to lose out on'those points,. okay? All right, let ' s take an appearance at Quick Research study. 21.3. Quick Study 21.3, all right? Okie doke. Quick Study 21.3. The adhering to information is available for. a business ' s upkeep cost over the last 7 months. Using the highlow approach, quote both the. taken care of and also the variable elements of maintenance cost. Okay, the first point that I constantly do. of all, is determine which of these variables is the X and also which of these variables is the. Y.Which of these variables is the X

? > > Upkeep hours. > > Maintenance >>hrs is >>X. And Also this is Y, fix? Currently when you'' ve recognized the X as well as the Y,.

cover the Y'' s and also choose which among these is your reduced X and which one of these is your.

> > That ' s our low? > > November. Okay, excellent.

Y for the high and the reduced as we do this, okay? Take an appearance at that information while we go with.

It and let'' s resolve this, all? Okay. The very first point that we have to do is recognize.

that we are attempting to resolve this in the fashion of Y equals A plus B times X. That'' s the cost of a combined line, right? Okay, the very first thing we'' re mosting likely to resolve. for is B, the variable price per unit.So B is mosting likely to equal the change in Y separated. by the change in X of the high and the low factors. That equals let me switch over pens $8,100 minus.

$ 3,600; is that right? Divided by 24 minus 6; is that appropriate? As well as does that appeared to $250 a maintenance.

hr or $250 a system? Okay. In fact, let'' s go in advance and that ' s$ 250 a.

upkeep hour. Okay, to make sure that is our B, isn'' t it? Okay, questions there? Now what we'' re mosting likely to do is we ' re going. to go back to the Y amounts to A plus BX. And also we intend to solve for A,

which is the repaired.

expense, alright'? Well, we addressed for B.B equals $250 times.

X. Currently we ' re mosting likely to borrow the Y and also the X. from either the high or the low collection of information.

Okay, I normally choose the low since it ' s. much easier math. The reduced what is the Y at the >>low point? Just how much? >>> > 3,600. > > $3,600? And what is X at the reduced? > > Six.

> > Six? Okay. So 3,600 now equates to A plus 6 times $250 is. 1,500. An equates to$ 2,100? Is that correct? Okay. Now, we have fixed for this.Now, you can compose this like Y equals $2,100. plus 250X. You might do that yet that ' s kind of the nottoothrilled.

look. Okay? I such as to define it for this trouble. What does Y equal in this problem? What does Y equivalent? >>> > Maintenance costs >>. > > It amounts to and much more specifically upkeep.

costs, right? Total upkeep expenses. So allow'' s say total maintenance costs equals

.$ 2,100 plus and what does X equal in this? >>> > Number of hours worth. >>> > Upkeep hours, all right, equals $250 per.

upkeep hour times the variety of maintenance hrs, all right? That provides me a cozy fuzzy in my belly that.

you know what you'' re doing, all right? Because, as well as I assume that is useful for people.

they can take a look at that and also truly understand a lot even more than simply taking a look at this.Does that make sense? Because now what you can do is you can plug.

in estimated varieties of upkeep hours and also you can estimate your total maintenance.

All right, concerns on that? Now let'' s do Exercise 21.9; is that correct? > > A jeans maker is making a new line of.

jeans called the Slims. The Slims, it'' s like skinny jeans? Should I obtain a set of slim jeans? Should I put on a set of skinny denims? Okay. The denims will sell for $205 per pair I'' m. not obtaining the Slims, all right? That is greater than I spend for my jeans. The jeans will certainly market for 205 per pair and they.

expense 164 per set in variable prices to make. Calculate the centimeters per device, the centimeters proportion and also.

define what the CM proportion reveals about this brand-new jeans line. Well, this is quite easy, alright? Not a great deal to say regarding this except the answer.

205 minus 164, the Centimeters is$ 41 per unit. The CM ratio is your CM divided by your sales. What does that mean when we say we have a.

contribution margin ratio proportion 20%?

in sales, 20% of that mosts likely to covering taken care of expenses and ideally, eventually, to supply.

earnings. Okay? Your CM each and also your CM ratio are really,.

Cool. Concerns on that? And after that we have a pair of handouts to go.

over. Prior to we review those handouts, allow me do.

simply a little refresher course below, alright? And have a look at the computer system. Well, allow'' s even back up a little bit.Let ' s do a bit more of a refresher course. We spoke about how there is the typical.

strategy to doing a revenue declaration, and also this is utilized for outside coverage. That type of technique is going to come to.

And it'' s going to be sales minus your expense. And also then we deduct out our operating expenditures.

which amounts to earnings, all right? Yet we have actually introduced, lately, this payment.

strategy. Okay? As well as this is so essential, so important. This is where we arrange costs by actions. We take our sales and also then we subtract all.

of our variable expenses despite whether they'' re item or duration. And we come to this number called payment.

margin. After that we deduct all of our taken care of prices regardless.

of whether they'' re product or period and afterwards we reach take-home pay. Currently this approach is a lot extra useful for monitoring,.

all right? A lot, a lot more valuable for management.And I think I likewise

informed you that whenever. I take a look at an income statement, the very first thing I do is go to the middle to see if it ' s gross. margin or if it'' s payment margin to make sure that I know which approach that they prepared it. in. Okay? Now, we ' ve constructed on this and right here'' s an additional.

Okay, wear ' t do them down below, all right. Simply do the CM ' s for, CM'per device, for sales.

profits minus variable price amounts to contribution margin. Okay? Now this is for 2,000 systems and also a whole lot of times.

I'' ll simply compose that over the total amount, all right? Now, I also spoke about how if I offer you.

Or if, rather, I offer you this information and this. And I want you to be very proficient at browsing.

a payment margin, a payment format revenue statement. And afterwards, naturally, we spoke about what.

the payment margin proportion is, which is your centimeters separated by your sales.Okay? With that said knowledge, allow ' s do the handouts.'that I assigned.

Allow ' s go on and'do allow'' s do Lorenzo, the. Lorenzo Handout first, okay? The Lorenzo Handout first.

Okay, I can see the overalls below and also this is. My per systems. If I take 1,040,000 divided by 13,000, what.

do you obtain? 80? Good. $80 even. , if I take 85,200 split by 13,000 I obtain 65.60;.

;.

is that correct? If I take 187,200 divided by 13,000 I get.

That'' s also this minus this? Okay, so there are my per system amounts.

And also that'' s how I pick the finest place to place. It ' s right there, isn ' t it? And also that ' s a really, really important number,.

this split by this, right? Would'' ve obtained the very same number, alright. Okay, recast the info over for Lorenzo.

at an activity degree of 30,000 or of 20,000 systems offered. Do it in proper type. What do I imply by appropriate type? Well, I'' ll reveal you right here in a second. Sales minus variable costs equals CM payment.

margin, minus your repaired equals earnings, remedy? Allow'' s do that for overall and each, alright? And also we are doing this at 20,000 units; is.

that proper? Now, our each coincide as above which.

Was 80, 65.60 as well as 14.40? So now we simply take each one of these numbers,.

times 20,000, to obtain these quantities right here. As well as I believe that amounts to 1.6 million; is.

that proper? ; is that? Okay. This equates to 1,312,000. As well as that times that or that minus that equals.

288,000; is that appropriate? Our fixed cost stay the exact same at 124.

That minus that equals what? >>> > 164,000. >>> > Okay. Currently when I claim in proper kind, what I suggest.

Have that have your per devices over below. Okay, it looks all wonderful. Currently allow'' s go ahead and also do the exact same thing at.

an activity level of 8,000 devices marketed. When again we have sales minus our variable.

prices equals centimeters minus our repaired costs amounts to take-home pay, fine? Thank you. As well as let'' s do that for overall at 8,000 units. And allow'' s placed our per systems right here, those have. not altered, 80, 65, 60 as well as 14.40. Okay, currently we take these 3

numbers times. that number to

obtain these three numbers.And I think that equates to 600 and 40 thousand. 524,800 and 115,200, is this taking a look at.

with anybody? >>> > Yeah >>. > > Okay. Set expenses continue to be the exact same at 124,000. Right here we have an adverse bottom line, right? To ensure that is it. Cool? Any questions on the Lorenzo Business handout? Okay. Something similar to this sheet ought to be somewhat.

easy now. I want to make sure you'' re not getting.

All right, if there'' s no questions on that,. Let ' s take a look at the shaded box handout, all right?

do separately. As well as simply to solve for these, alright? Okay, let'' s do company A. Okay, that minus.

that equates to 57,600. Well this minus something equals 46,220 so.

this has to equivalent 11,380; is that right? And after that I might take any type of one of these numbers.

split by its each amount and also I would get the variety of systems cost 3,200; is.

This minus this equals a lower line that'' s. adverse of 1,550. Something minus that equates to that so sales.

Would certainly equate to 82,950? Now I take each one of these 3 numbers,.

divide it by 1975, and also I think that'' s 42 there, 20 and 22; is that appropriate? >>> > Yes >>. > > All right. Business C. All right, now right here I have my per. units and my number of systems sold, alright. If I take these three amounts times that,. I can obtain my overall amounts which amounts to 335,175. Which amounts to 215,250. And also this equates to 119,925; is that appropriate? And afterwards this minus this amounts to 32,125; is.

Well, allow'' s take a look here. Of all, this minus something equals.

17. This must be 160,000? Okay. The Centimeters proportion is 25%? That suggests variable costs are 75% of sales;.

Is that? Does that make sense? If this number is 25% of that number than.

this number is 75% of this number, all right? So allow'' s simply do a little algebra below.

.75.

times sales, which is we'' ll say is S, amounts to 45. So 45 divided by.75 equals our sales which. equals what? Sixty. Amazing. Sixty minus 45 is 15. Okay. This split by this, we can reach the number. of system offered which I assume equates to 11,800; is that right? >>> > Yup. >>> > As well as currently we can take this quantity times these.

> > Yes. See, it'' s like a little puzzle? You could do these on a date with your darling,.

right? Wouldn'' t that be an enjoyable method to invest the day,.

Okay. All right, so, questions on that?

you know. What you know. As well as you'' d be surprised just how much the amount of times. you can simply solve the remainder of it, cool down? All right, that was it for the research, wasn'' t. it? Okay, any type of questions? Okay. Now let'' s move onto the following topic, alright. What I wish to speak about now is breakeven.

That is our breakeven point, where our bottom. Now we understand that if we sell over our breakeven. And if we offer listed below it, it will certainly be a loss,.

store. Just how numerous cups of coffee if I own a coffee store.

do I have to offer to at the very least breakeven? Okay, so I'' m not shedding money. Okay. Now, the solutions for breakeven, computer.

breakeven are the breakeven point in devices is acquired by taking your repaired costs divided.

by your contribution margin each, fine. Your breakeven factor in sales bucks is calculated.

By taking your repaired expenses divided by your contribution margin proportion, all? Currently, I such as to in some cases rewrite these as.

the following. Going over to the paper camera. Okay, is to state my breakeven my breakeven.

in devices equals repaired prices divided by centimeters each, okay.And my zoom out

right here a little. My breakeven in sales dollars equals repaired. expenses per CM ratio.

Okay, that ' s how we compute breakeven, all. right? Let ' s take a look at this, back at the.

computer. If Tippins Co markets item XYZ at $25 per.

device and taken care of prices are 200,000 and variable prices are 17 per system, just how lots of units must.

be sold to break even? Well, the first point we do is we find out.

Our payment margin per device? Which is $8; 25 minus 17. After that to figure out our recover cost in units,.

we take our fixed prices of 200,000 split by that centimeters each of $8 each which.

amounts to 25,000 systems. So, if we sell 25,000 systems, what is our bottom.

line? What is it? If we market 25,000 systems, our bottom line is.

If we offer 25,001 devices, we will have a.

profit. If we offer 24,990 devices, we have a little.

Okay, all details prior to remains unmodified. Repaired cost to 200,000. Unit sales rate is 25 as well as device variable expense.

is 17.

Well, our centimeters each is $8, hence our CM proportion.

is 8 separated by $25 amounts to 32%. So our break even in sales dollars amounts to.

200,000, separated by 32% equals 625,000. You with me? Currently, what we could have additionally done to examine.

that was simply to take the variety of devices to breakeven, which is 25,000, times $25 per.

Which is the sales rate. Does that make sense? If that'' s just how several systems we have to sell to.

Make feeling? > > What that suggests is if you have sales of.

625,000, your profits will certainly be >>> > No.

> > Zero.As an issue of fact, that'' s what I intend to. do now. Utilizing this information we simply resolved, allow ' s. take a moment as well as make use of the above data, as well as I desire you to prepare a contribution margin.

earnings declaration for Tippins at the breakeven level. Okay? So we'' re recasting this payment margin.

income statement at the breakeven unit degree which we have actually just solved for. Does that make sense? Okay, so allow'' s play that music for a pair. mins and also you people in your home do this too. Let'' s go on and also recast Tippins at the breakeven.

(Music) Okay, allow'' s go in advance as well as resolve that. Sales minus variable costs equals contribution.

margin minus dealt with prices amounts to web revenue; is that appropriate? Currently, we'' re going to do this for

an overall, as well as. Of training course we ' re going to have our per units over right here? Well we recognize our each, they are $25,.

$ 17 and $8; is that correct? Okay. And also what is the breakeven degree that we solved.

> > 25,000 systems. Okay, so currently let ' s take these amounts times. > > It ' s 625,000 which we did solve for there.

line? >>> > No. >>> > Okay. That is at the breakeven degree. Make good sense? Cool? All. What I desire to do now any type of questions on that? What I want to do currently is deal with a few more.

in class.I desire to

service Quick Research 216 and also Quick.

Study 218, all right? Quick Research study 216 as well as Quick Research 218. We'' ll do those in class, again, while they.

play this songs. And after that we will certainly go over the answers and afterwards.

maybe I'' ll let you go a little early today because I understand last time I kept you a little.

long. Quick Study 216, Quick Research 218. I'' ll placed those up on the screen too from.

(Songs) All right, I won'' t read it to you. It'' s pretty doggone selfexplanatory, rather.

easy, isn'' t it? Right? Currently you ought to be a pro at determining CM.

per system and payment margin proportion now. But there are your responses. And also, obviously, I always such as to doublecheck.

this response by taking my number of units needed to market to breakeven times my prices.

of 90, 90 times 3,000, does that equivalent to 270,000? Okay, that'' s a great means to doublecheck it,.

okay? So did everybody get those solutions on 216.

Okay, we great? I recognize I'' ve been giving you a great deal of details,.

so I wish to decrease a little bit from what I did at the last lecture. The research that I would certainly like you to do is.

Workout 21.5, 21.10, 21.11 and also 21.12. As well as also do problem 212B, all right? Make sure you do that, it'' s really vital.

that you do your homework. All right, anything else? All right, keep in mind to do your Phase 20.

mini project if you place'' t currently and we will see you later, guys.Byebye.

.