CVP SIMPLIFIED | How to calculate Breakeven & margin of safety | ACCA PM | Q. Heath Nuts

🚀 Get all my PM Videos here: tinyurl.com/ACCA-PM-Help 🚀 Learn how to solve a CVP (cost-volume-profit) question from ACCA PM / F5. I'll show you how to quickly calculate Breakeven Point, Margin of safety, and more, 100% demonstrated in the practice platform spreadsheet, and pass paper PM. I'll also demonstrate specific exam technique and spreadsheet functions to save you lots of time and get a pass on PM. Good luck on your ACCA PM exam!
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Table of Contents
00:00 Introduction
01:00 Time Management
01:38 Make a template
02:37 Breakeven point for the gym
03:50 Margin of safety for the gym
04:13 Own figure rule explained
04:55 Margin of safety for the gym
05:46 Breakeven point for the cafe
08:58 Round up function explained
09:57 Margin of safety for the cafe
11:31 Part C of the question
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Steve Willis ACCA
www.stevewillistraining.com
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[@anesuishebvukumbwe1229]

Thanks Steve you have made life quite easy for me!

[@SteveWillisACCA]

Excellent! Good luck tomorrow :)

[@godwinkasaizi882]

Very positive presentation

[@SteveWillisACCA]

Thanks a lot

[@quietside1380]

Your videos are extremely helpful!

[@SteveWillisACCA]

Happy to hear that!

[@kby39]

Thank you sir, very well explained and presented..

[@SteveWillisACCA]

Most welcome!

[@kanvimalhotra9230]

Thank you for yet another amazing video! Can you please make a video on Transfer Pricing again before the exam, I am still not able to understand that topic properly. Thanks!!

[@SteveWillisACCA]

I'll do my best.

[@amirgillll]

Hi Sir, Could you please assist in below type OT about cost volume profit analysis: " A company makes and sells a single product. When sales per month are 6.8 million, total costs are $6.56. when sales per month are 5.2 million, total costs are $5.44 million. There is step cost increase of $400,000 in fixed cost when sales are $6 million, but variable unit costs are constant at all levels of outpur and sales" Requirement: what is breakeven point for sales revenue per month??

[@SteveWillisACCA]

Step 1: Use the high/low method and get the the fixed cost BELOW 6.8 million--this is covered in all the books and in MA high/low method with a stepped cost Step 2: Get the total variable cost at 5.2 million by subtracting FC from total cost step 3: get the CS ratio at that level step 4: Fixed costs/CS ratio = breakeven revenue in sales That's how i would do it. But it's a tricky question. There will be easier ones to do first in the exam for sure.

[@amirgillll]

@@SteveWillisACCA thanks Sir

[@SteveWillisACCA]

You're welcome :)

[@DhayllanTDev]

Sir, one thing I dont seem to understand is, why did you exclude the calculation of rate according to the hours in the scenario? Every calculation was on the basis of the cost per hour only But why?

[@SteveWillisACCA]

Can you tell me what point in the video please?

[@DhayllanTDev]

Okay so for example at 17:01, regarding the calculation of total gym sales right, so like, $8.4 is the entrancd price of the gym per hour right?? So how come you just calculated the total sales for the gym with regards to the price of 1 hour only? And also, with regards to the information in the question, at one part it said that out of a total of 330 customers, 40 of them went to the gym from 9 am to 5pm for 30 days in june, so how come we dont calculate the revenue earned from 290 customers and the revenue earned from 40 customers seperately?

[@SteveWillisACCA]

I see. We are try to get to an annual contribution here, so I am adding up contribution earned from each revenue stream and totaling them, Total contribution/total sales = CS Ratio. So I am using hourly info to get to total info.