Informe Finanzas

FACULTY OF BUSINESS
ACCOUNTING SCHOOL
COST ACCOUNTING
COURSE:
Finances
AUTHOR:
Sanchez Mariños, Fatima Milene
TEACHER:
Dr. Ferradas Burga, Matías Martín Alberto
Trujillo - Perú
(2024)
1
INDEX
2
I. INTRODUTION
In the dynamic business environment of Peru in 2024, cost accounting

has established itself as an essential tool for the efficient and strategic
management of organizations. This discipline, fundamental in the
financial structure of companies, allows not only the identification and
control of costs associated with production and operations, but also the
provision of critical information for decision making.
Costs are an important pillar within any type of company, thanks to them
an industrial or manufacturing company that transforms raw materials to
obtain a finished product, can identify how much it invested in its
manufacture. Likewise, a trading company can know the cost it had to
pay to its different suppliers for the merchandise that in turn it will resell
at a higher price. And a service company can identify the total resources
involved in the elaboration of the service it will provide.
The purpose of this report is to provide a comprehensive view of cost

accounting, exploring its fundamental concepts, answering some
questions to discover its operational efficiency and the competitiveness
of companies in Peru.
II. DEVELOPMENT
2.1. Definition of cost-volume-utility análisis
The Cost Volume Utility model or known by its acronym (CVU) is a vitally
important tool that allows us to determine the costs and the desired
profit, therefore small and medium industries should apply this model
because it allows to determine their costs and the profit that is expected
to be obtained, the information obtained from it serves for decision
making by the organization.
Cost-volume-utility (CVU) analysis studies the behavior and relationship
between these elements as changes occur in the units sold, the selling
price, the variable cost per unit or the fixed costs of a product.
3
2.2. Assumptions underlying the CVU analysis
 Changes in revenue and cost levels occur solely due to variations
in the number of units sold of the product or service. The volume
of units sold is the only factor that generates revenues and costs.
Similar to how a cost driver is any factor that influences costs, a
revenue driver is a variable, such as volume, that causally impacts
revenue.
 Total costs can be divided into two components: a fixed
component that does not vary with units sold and a variable
component that changes with units sold.
 When plotted graphically, total revenues and total costs show a
linear behavior (meaning that they can be represented as a
straight line) in relation to units sold within a relevant range and
time period.
 Selling price, variable cost per unit and total fixed costs (within a
relevant range and time period) are recognized and given on a
constant basis.
An important feature of cost-volume-utility analysis is the distinction
between fixed and variable costs. However, it should always be kept in
mind that whether a cost is variable or fixed depends on the time period
for a decision. The shorter the time horizon, the higher the percentage of
total costs that are considered fixed.
2.3. Differences between operating and net income

2.3.1. Operating income
Operating income is a financial measure that indicates the amount of
profit a company has generated through its operations. It is also known
as operating profit or earnings before interest and taxes.
Operating costs include all expenses related to the production and sale
of goods and services, such as costs of materials, salaries and wages,
rents and leases, among others. Operating revenues include all sales of
goods and services from the Company's main activities.
It is calculated with the following formula:
4
Operating income - Operating costs and expenses = Operating
utility
2.3.2. Net Utility

Net utility is operating utility plus non-operating income (such as interest
income) minus non-operating costs (such as interest cost) minus interest
taxes (such as interest income) minus non-operating costs (such as
interest cost) minus income taxes on profits.
Net utility = Operating Utility - Income Taxes
2.4. Definition of contribution margin, contribution margin per unit

and contribution margin in percentage
The contribution margin represents the portion of sales revenue that is
not consumed by variable costs and, therefore, contributes to the
coverage of fixed costs.
Contribution margin = Total revenues - Total variable costs
2.4.1. Contribution margin per unit

This value indicates how much a product or service contributes to fixed
costs per unit. The contribution margin per unit is a useful tool for
calculating contribution margin and operating profit.
Contribution margin per unit = Selling price - Variable costs per unit
2.4.2. Contribution margin in percentage
5
It is a financial indicator that shows what percentage of sales contributes
to cover fixed costs and generate profits.
Contribution margin in percentage = (Contribution margin per unit /

Sales Price ) X 100
2.5. How would an increase in the profit tax rate affect the break-
even point?
An increase in the income tax rate does not affect the break-even point.
The operating profit at the break-even point is zero, and no income tax is
paid at this point.
2.6. What is operating leverage? How is knowledge of the degree of

operating leverage useful to managers?
Measures the result of the ability to convert variable costs (such as labor)
to fixed costs (depreciation). The objective is to generate higher
profitability.
Cvu analysis helps managers make product decisions by estimating the
expected profitability of product alternatives.
2.7. How does a company that manufactures various products

calculate the break-even point?
In accounting, the breakeven point is calculated by dividing the fixed
costs of production by the price per unit minus the variable costs of
production. The breakeven point is the level of production at which the
costs of production equal the revenues for a product.
2.8. "In CVU analysis, gross profit is a less useful concept tan
contribution margin." Do you you agree? Explain briefly.
In my opinion, the gross profit is just as useful as the contribution margin,
since it gives us the final value of the process, letting us know if there
was a profit and the exact amount of the profit.
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III. BIBLIOGRAPHIC REFERENCES
Lituma Carmona, M. (2015). Academic Unit of Business Sciences. Costs: a

strategy for business decision making in industries, for small and
medium-sized industries. (pág, 5).
https://repositorio.utmachala.edu.ec/bitstream/48000/3290/1/ECUACE-
2015-CA-CD00127.pdf
Maldonado, D. (2023). Operating utility, an indicator of efficiency in

companies. Fierros. https://www.fierros.com.co/es/noticias/utilidad-
operativa-sinonimo-de-eficiencia
(April 12, 2022). How much to sell to avoid losses: the importance of
contribution margin. Blog Ualá. https://blog.uala.com.ar/emprendo-mi-
negocio/margen-de-contribucion/#:~:text=Margen%20de%20contribuci
%C3%B3n%20unitario,los%20costos%20fijos%20por%20unidad.
Esparza, J. (2016). Leverage. Operating Leverage, financial and total.

http://web.uqroo.mx/archivos/jlesparza/acpef140/3.3%20Grados
%20apalancamiento.pdf
Cory, M. (February 12, 2024). Breakeven Point: Definition, Examples, and

How to Calculate. Investopedia.
https://www.investopedia.com/terms/b/breakevenpoint.asp#:~:text=In
%20accounting%2C%20the%20breakeven%20point,the%20revenues
%20for%20a%20product.

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FACULTY OF BUSINESS

Sanchez Mariños, Fatima Milene

Dr. Ferradas Burga, Matías Martín Alberto

In the dynamic business environment of Peru in 2024, cost accounting

The purpose of this report is to provide a comprehensive view of cost

2.3. Differences between operating and net income

It is calculated with the following formula:

2.3.2. Net Utility

It is calculated with the following formula:

Net utility = Operating Utility - Income Taxes

2.4. Definition of contribution margin, contribution margin per unit

It is calculated with the following formula:

Contribution margin = Total revenues - Total variable costs

2.4.1. Contribution margin per unit

It is calculated with the following formula:

2.4.2. Contribution margin in percentage

Contribution margin in percentage = (Contribution margin per unit /

2.6. What is operating leverage? How is knowledge of the degree of

2.7. How does a company that manufactures various products

Lituma Carmona, M. (2015). Academic Unit of Business Sciences. Costs: a

Maldonado, D. (2023). Operating utility, an indicator of efficiency in

Esparza, J. (2016). Leverage. Operating Leverage, financial and total.

Cory, M. (February 12, 2024). Breakeven Point: Definition, Examples, and

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