How to apply the volume-cost-profit analysis method in property management?

The volume-cost-profit analysis method is called output-cost-profit analysis method, also called break-even analysis method or break-even analysis method. By analyzing the relationship between production cost, sales profit and product quantity, we can grasp the change law of profit and loss, guide enterprises to choose the business plan that can produce the most products at the lowest cost, and make them get the maximum profit.

First of all, introduce several concepts:

Total contribution-refers to the balance after deducting the total variable cost from net sales.

Variable costs-variable manufacturing costs, variable sales expenses and variable management expenses.

Unit marginal contribution, calculated according to the ratio of contribution gross profit to sales.

Gross profit contribution rate = unit contribution rate/unit product price.

Or: contribution gross margin = total contribution gross margin/total sales revenue.

In this way, we can calculate what kind of business volume the enterprise needs to achieve in order to compensate all the costs of the enterprise-just enough to make ends meet. This is the break-even point analysis. It can be expressed as:

BE=FC/(SP-VC)

BE stands for the business volume of breakeven point;

FC stands for fixed cost;

SP stands for unit product price;

VC stands for variable cost per unit product.

If the business volume of the enterprise is lower than this point, there will be losses; Above this point, it will be profitable.

The activity rate at the break-even point indicates the minimum activity level required for an enterprise to achieve profitability.

Breakeven operating rate = breakeven business volume/normal startup business volume.

Margin of safety: indicates the difference between the sales volume at the critical point of profit and loss and the expected business volume. The economic significance refers to how many enterprises will change from profit to loss when the existing business volume decreases. The calculation formula is as follows:

Safety production business volume = estimated business volume-breakeven point business volume

Safety margin = (safety margin/actual business volume) * 100%

Sales profit rate = sales profit/sales revenue = safety profit rate * contribution gross profit rate.

It shows that only the contribution of the margin of safety (that is, the business volume beyond the critical point of profit and loss) constitutes the profit of the enterprise.