Exercise 1

·         The company Clean, a.s. business in the field of cleaning services. Its output is
therefore a square meter (m2) of tidy area. The company records the following costs:

·         consumption of cleaning agents = variable costs

·          consumption of mops, buckets, towels = variable costs

·         labor costs of cleaners = variable costs

·         salary costs of top management (managers, assistants) = fixed costs

·         office space rent = fixed costs

·         depreciation of washing equipment = fixed costs

·         Depreciation of the washing machine = variable costs

·         car depreciation = fixed costs

·         travel expenses = fixed costs

·         telephones, postage = fixed costs

·         marketing costs = fixed costs / variable costs (for examples % of sales)

·         bookkeeping, IT costs = fixed costs


Exercise 2

The company has found the following data on its performance:

1. total fixed costs (FC) CZK 15,000

2. variable costs per unit of production (incl.) CZK 10

3. total production (Q) 500 pcs


TASK:

1) Calculate the total variable cost of production (VC).

2) Calculate the fixed cost per unit of production (fc).

3) Calculate the total cost of production (C).

4) Calculate Ø total production costs (ØC).

Solution:

(1) VN = vn * Q = 10 * 500 = 5 000 CZJ

(2) fn = FN / Q = 15 000 / 500 = 30 CZK

(3) N = FN + VN = 15 000 + 5 000 = 20 000 CZK

(4) ØN = 20 000 / 500 = 40 CZK


Exercise 3

The maximum annual volume of production (production, output) in the amount of CZK 125,000 can be
ensured at an annual fixed cost of CZK 2,400,000. In the monitored period, the production capacity
was used only to 95%.

1) Find out free (unused) fixed costs (FCU)

2) Find out how the size of the unit fixed costs has changed

Solution:

Task 1:

Unused fixed costs = 0.05 * 2 400 000 CZK = 120 000 CZK

Task 2:

Unit fixed costs 1 = 2 400 000 / 125 000 = 19.2 CZK

Unit fixed costs 2 = 2 400 000 / (125 000 * 0.95) = 20.21 CZK

Exercise 4

Swimming pool, a.s., is open daily from 10 a.m. to 8 p.m. It is open for approximately 350 days a
year (15 days are closed for technical reasons or for holidays). A maximum of 150 people can use
the company at one time. The annual amount of fixed costs in 2018 (rent, depreciation, labor costs,
marketing) was 52,000 thousand. CZK. In fact, in 2018, the company was in operation for 342 days
throughout the opening hours, visited by 182,380 people, who spent a total of 342,184 hours. Find
out and interpret the amount of unused fixed costs.


Exercise 5

The company produces three types of textiles for the production of sportswear. The usual annual
volume of services sold, costs and prices for individual products are as follows:

Type of product

Amount of production
(production volume), quantity, number of products

Variable cost per unit (m), variable unit cost

Price per unit (m)

Fixed costs

Lemtex

1 000

390

550


Bertex

2 000

250

400


Detex

4 000

75

255


Total




1 200 000


Tasks:

1. Find out the economic result with the stated volume and structure of outputs.

2. Find out how much revenue the company will reach a turning point with an unchanged performance
structure.

3. Determine the volume of revenues that will ensure the achievement of a profit of CZK 500,000
while maintaining the performance structure.

4. The company's management decided to double sales of higher quality and more expensive Lemtex
fabrics by 1000 bm and, conversely, to reduce sales of cheaper Detex fabrics by 1,000 bm and
believed that with this performance structure, revenues would exceed the break-even point and the
company would make a profit. Is this reasoning correct?

Solution:

Ad 1)

Product

           Sales

                    Variable costs

                                  Margin

Lemtex

           550 000

                    390 000

                                  160 000

Bertex

           800 000

                    500 000

                                  300 000

Detex

           1 020 000

                    300 000

                                  720 000

Total

           2 370 000

                    1 190 000

                                  1 180 000

Fixed costs



                                  1 200 000

Loss



                                  -          20 000


Ad 2)

Sales at the turning point = fixed costs / (margin / sales) or fixed costs / (1-(variable
costs/sales))

Sales at the turning point = 1 200 000 / (1 180 000 / 2 370 000)

Sales at the turning point[ ] = 1 200 000 / 0.49789

Sales at the turning point = 2 410 169 CZK


Ad 3)

Sales at the turning point = (fixed costs + profit) / (margin / sales) CV[BZ] = (1 200 000 +
500 000) / (1 180 000 / 2 370 000)

Sales at the turning point = 1 700 000 / 0.49789

Sales at the turning point = 3 414 407 CZK


Ad 4)

The reasoning is not correct, it depends on the performance margin, which is higher for Detex than
for Lemtex.