Week 3 maths workshop notes

School: University of South Australia - Course: ECON 1008 - Subject: Accounting

Week 3 maths workshop notes. CONTRIBUTION MARGIN - S - V BREAK EVEN VOLUME- X=F/S-V NET PROFIT LOSS- (S-V)X-F Case study- S= $15 V= $15/3 + $5 F= 23, 940 X= 23/15-5= 2,394 = breaking even Pg 12 X= 3200 F= 23,940+ 4000+ (2 x 2160) = 32,100 S=$15 per customer V= $5 per customer P= (S-V)X-F P= (15-5) x 3200-32260= -$260 There will be a monthly net loss of -$260 Example 1 durable costs- case study C= f + vx This month =24190 = f + 530v Last month= 18745= f = 365v =24190 = f + 530v -18745= f = 365v = 24190-18745= f- f + 530v - 365v 5445 = 165c 165v =5445 C= 5445/165 = 33

Fixed cost- f= 24190 - 530v = 24190 - 530 x 33 = 6,700 Example 2 If eavh icecream sells for $6 how many should they sell to break even Fixed costs= rent, wages, utilities - no matter how much you sell they will always be there Variable costs= ingredients, cones, napkins, tasting spoons- the more customers the more you pay F= 500 V= 2.30 S= 6.00 x- x= f/ s-v=.5000/6.00-2.30= 1351.35 should sell 1352 ice creams to break even. If prices increase- F= 5000 V= 2.30 = 0.50 + 1.20 = 4.00 S= 4 = no contribution margin left over to cover fixed cost. = shut down point If price of icecream is cheaper F=5000 V= 2.30 = 0.50 + 1.20 = 4.00 S=3.00 Is a negative