MGT 5 Lecture Notes - Lecture 18: Transfer Pricing, Chart Attack
10 Dec 2018
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Final topics (tues, dec 11 at 8am in wells fargo hall rm 1n108) Profit level 1 and 2 and margin of safety for each. Actual sales units vs expected sales units. General (fc +(atni/(1-tr))) cm/ = additional units needed to reach atni increase. Fc cm = units needed to break even (atni/(1-tr)) cm = margin of safety (fc+(atni/(1-tr))) wa cm/ = additional units needed to reach atni with 2+ products. Maintain the same level of profitability that we always have (not pt = 0) Fc = (vc/ )(existing units) + (cm/ + vc/ )x. Atni = (1-tr)(-fc + (vc/ )(existing units) +(cm/ + vc/ )x) Volume variance is ,000 favorable (1,000 more units sold) Price variance is ,250 unfavorable (cm/ was lower than expected) Flexible budget is what the static budget allows for at the actual level of activity. Estimated cash collections for the month of x.
