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VOLUME ANALYSIS

VOLUME ANALYSIS. FC + IBT Required Volume Q=       CMU Break-Even: BE= FC/CMU CMU = SP - VC Multiple Products: CM%=(S-VC)/S IBT = NI / (1-Tax Rate). Utilization. Breakeven Utilization: BU = BE / C C="Capacity" Required Utilization: RU = Q / C

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VOLUME ANALYSIS

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  1. VOLUME ANALYSIS FC + IBT Required Volume Q=       CMU Break-Even: BE= FC/CMU CMU = SP - VC Multiple Products: CM%=(S-VC)/S IBT = NI / (1-Tax Rate)

  2. Utilization Breakeven Utilization: BU = BE / C C="Capacity" Required Utilization: RU = Q / C Expected Utilization: EU = EV / C EV=Expected Volume Common values: BU = 50-60% RU = 70-80% EU = Initially > RU or busted.

  3. Operations Operating Leverage: OL = CM / IBT Margin of Safety Ratio: S = (EV - BE) / EV Inverse of each other. Common Values OL about 4. S = 25%

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