BM 6601

MANAGERIAL ACCOUNTING

THAI Illusion International

University

Submit to

Dr. Surasakdi Prugsamatz

Submitted by

Section 55
Name ID
Mr. Min Thu 5529001
Mr. Ian Chen 5529002
Ms. Chayanan Trisupatsilp 5529004
Ms. Fan Jing 5529005
Mr. Jakapan Leeathiwat 5529012
Ms. Thanawan Nitiprasongphol 5529014

Submission Date: December 21th, 2012

 Table of Contents

Contents Page
University Introduction_______________________________
Part 1 Definition and concept
1.1 Traditional Costing System________________________
Activity Base Costing System______________________
1.2 Activity Base Management________________________
Part 2 Calculations
2.1 Cost Objective_________________________________
2.2 Breakeven in unit and in amount___________________
Margin of Safety in amount and in percentage________
Operating Leverage_____________________________
Sale mix in amount and in percentage_______________
Target profit in amount__________________________
2.3 ABC and TCS_________________________________
 University Introduction and Background

Thai International University (TIIU) exists for the main purpose of serving the
nation by offering high-standard international education and providing humanistic
knowledge, particularly in the business education through researches and interdisciplinary
approaches. The university uses English as the official medium of instruction.

The university is fully accredited not only by the Ministry of University Affairs
(MUA) and academic standards are accepted by Office of the Minister, Ministry of
Education of Thailand, and acknowledged throughout the world.

Thai International University (TIIU) is a private and profit making education institution in
Thailand. It offers a range of courses in Bachelor of Business Administration in majors of
Management, Marketing, Financial and Accounting. In order to offer a wide knowledge, the
university offers courses to Master Degree in business- Management, Marketing and
financial. It also offers courses for working executives who wish to upgrade their knowledge
by attending short courses and workshops with certificates and diplomas.

The university offers 2 semesters to Bachelor degree students, each semester consists of 5
months. Moreover, Master degree have 3 semesters, each semester consists of 4 month.

To meet the growing demands of international education in Thailand and the ASEAN
region, Thai International University will offer more range of course in Bachelor and Master
Degree. The universitys programs are designed to ensure our students learn and experience
what it takes to be successful in the real world.

Part 1 Definition and Concept

1.1 Traditional Cost System
Definition:
Traditional costing System uses one selected common cost driver, which assigns
manufacturing costs to products based on the relative usage of direct labor or machine hour.

Concept:
Traditional costing systems try to assign cost directly to products, rather than to
activities cost pool first and then from the activities cost pool to product units. The
traditional costing system gives information on what is spent, but not how it is spent. In
TCS, product costs are accumulated then the total of the accumulated costs is divided by the
number of units produced, which is give an average unit cost for the period.

Methods
There are several steps in the traditional costing process.
1. Identify all budgeted overhead cost.
2. Estimate indirect cost for the appropriate period (month, quarter, and year)
3. Choose a cost driver with a causal link to the cost (labor hour, machine hour)
4. Estimate an amount for the cost driver for the appropriate period (labor hours per period)
5. Compute the predetermined overhead rate
(predetermined overhead rate = estimated overhead costs / estimated cost-driver).
6. Apply overhead to products using the predetermined overhead rate.

Pros and cons of Traditional Costing system

Pros
Traditional costing is easy to apply, and trace all direct costs associated with a
product, this includes labor and direct material costs. However, it is difficult to
assign overhead costs to different products.
 Traditional costing can apply effectively when company produces only one product.
In Traditional costing system, non-valued added activity is also included which
causes inaccuracies when assigning costs to products.
Cons
Traditional costing is an outdated costing system in many companies because those
manufacturing companies now use machines and computers for much of their
production. Computers and machines make the system outdated because it often uses
direct labor hours to calculate cost. Cost is not appropriately assigned because direct
labor hours are not the best-cost driver to use.
Traditional costing system can sometimes cause cost distortion (under cost, over
cost). If it is under cost, business might not make enough profit to compensate with
their operation that may lead to bankrupt. On the other hand, over costing may
cause businesses to lose competitive advantages.
Traditional costing system can lead to bad management decisions because it
excludes certain nonmanufacturing costs (e.g. service sector).

Example:
Standard Factory overhead rate per Direct labor hour = Total FOH costs Total DLH
= 33,000 Baht 3,000 DLH
= 11 Baht / DLH

TCS Product A Product B Product C

FOH = 11 Baht x 1,000 DLH = 11 Baht x 500 DLH = 11 Baht x 1,500 DLH
cost 4,000 units 2,000 units 4,000 units
per unit
= 2.75 Baht = 2.75 Baht = 4.125 Baht
FOH cost per unit = Standard Factory Overhead rate per DLH x Total DLH consumed
Total number of units produced

TCS Product A Product B Product C

Direct Materials 12.50 Baht 10.80 Baht 13.00 Baht
Direct Labor 8.75 Baht 9.50 Baht 9.00 Baht
Factory Overhead 2.75 Baht 2.75 Baht 4.125 Baht
Total cost per unit 24.00 Baht 23.05 Baht 26.125 Baht

Ref: Lecture Notes

Activity based costing

Definition:
Activity-Based Costing (ABC) is a method of allocating costs to products and services. It is
generally used as a tool for planning and control. It was developed as an approach to address
problems associated with traditional cost management systems that tend to have the inability
to accurately determine actual production and service costs, or provide useful information
for operating decisions. With these deficiencies, managers can be exposed to making
decisions based on inaccurate data. The higher exposure is for companies with multiple
products or services.

Concepts:
In Activity-Base Costing system assigns the cost of each activity to all products and services
according to the actual consumption of the activity resource by assigning overhead costs to
direct costs
In the first Stage of activity based costing system, costs are traced to the various activities
performed by a firm. In the second stage, these costs are assigned to the firms products.
(Managerial Accounting 1993 Third Edition, Calvin Engler)

Pros and cons of Activity Base Costing system

Pros
It can help identify and eliminate non-value adding activities and unproductive.
It easy to consider about competitive price of product, improves budget and estimate
cost for performance in the future.
Cost of a product or service is more accurate because it has to allocate overhead and
other indirect cost to product.
It can help to plan long term effective strategies

Cons
Activity Base-Costing data can be easily misinterpreted and must be use carefully
when making decisions. So, manager must identify which costs are relevant for the
decisions.
It consumes a lot of time or resources to collect data.
Most of mangers do not like to use Activity Base Costing system because other firms
can discover easily some mistakes in production process and the weakness of
management in their company.

Example:
FOH items FOH costs Selected cost driver
IDM 1,000 Baht Units (group 1)
IDL 2,000 Baht DLH (group 3)
Depreciation 3,000 Baht MH (group 2)
Insurance 4,000 Baht Units (group 1)
Maintenance 6,000 Baht MH (group 2)
Purchase Order 7,000 Baht Units (group 1)
Utilities 10,000 Baht DLH (group 3)

Cost Driver Total Product A Product B Product C

Units 10,000 4,000 2,000 4,000
MH 50,000 25,000 10,000 15,000
DLH 3,000 1,000 500 1,500

1. Pool Rate

Pool 1 rate = IDM 1,000 Baht + Insurance 4,000 Baht + Purchase order 7,000 Baht
Total Units 10,000 units
= 1.2 Baht / unit

Pool 2 rate = Depreciation 3,000 Baht + Maintenance 6,000 baht

Total Machine Hours 50,000 machine hours
= 0.18 Baht / machine hours

Pool 3 rate = IDL 2,000 Baht + Utilities 10,000 Baht

Total DLH 3,000 hours
= 4 Baht / DL hour

2. Pool cost of Product

Product A Product B Product C

Pool 1 1.2 Baht / unit x 4,000 1.2 Baht / unit x 2,000 1.2 Baht / unit x
units = 4,800 Baht units = 2,400 Baht 4,000 units = 4,800
 Baht
Pool 2 0.18 Baht / mh x 25,000 0.18 Baht / mh x 0.18 Baht / mh x
mh = 4,500 Baht 10,000 mh = 1,800 15,000 mh = 2,700
Baht Baht
Pool 3 4 Baht / hours x 1,000 4 Baht / hours x 500 4 Baht / hours x
hours = 4,000 Baht hours = 2,000 Baht 1,500 hours = 6,000
Baht
Total = 13,300 Baht = 6,200 Baht = 13,500 Baht

3. FOH cost per unit

Product A Product B Product C
FOH cost / unit 13,300 Baht / 4,000 6,200 Baht / 2,000 13,500 Baht / 4,000
units = 3.325 Baht units = 3.1 Baht = 3.375 Baht

ABC Product A Product B Product C

Direct Materials 12.50 Baht 10.80 Baht 13.00 Baht
Direct Labor 8.75 Baht 9.50 Baht 9.00 Baht
Factory Overhead 3.325 Baht 3.1 Baht 3.375 Baht
Total cost per unit 24.575 Baht 23.4 Baht 25.375 Baht

Ref: lecture notes

1.2 Activity Based Management

Definition:
Activity Based Management is an approach in management that aims to maximize
the value adding activities while minimizing or eliminating non-value adding activities. The
overall objective of ABM is to improve efficiencies and effectiveness of an organization in
securing its markets. It draws on activity based-costing as its major source of information
and focuses on reducing costs, creating performance measures, improving cash flow and
quality and producing enhanced value products.

Objective:

ABM helps to examine important activities that improve the performance of

processes, activities and measurement system.
ABM can define and analyze activities and costs to determine the situation
ABM uses to monitor the result of improvement by reporting cost and provide
feedback to identify the error of process.
ABM help to determine value-added and non-value-added activity cost in order to
cut cost and downsize some operations.
ABM help to eliminate cost driver, consolidate operation when they have a complete
understanding of the activities being consolidated.

Pros and cons of Activity Base Costing system

Pros
ABM can increase the efficiency and lower costs of the organizations resources.
ABM helps to reduce spoilage or damage of assets.
ABM helps to improve processes and eliminate faulty activities and unprofitable
products or services in order to expand profit.
ABM can control and improve labor and overhead cost.

Cons
The value and benefit of ABM is difficult to quantify and time consuming
If no one uses the information provided, ABM system will be worthless.

Table 1: Salaries for Management Employees

Department Salary per Number of Annual Salary for each department
person Employees
 Top Level 100,000 4 100,000 x 4 x 12 months = 4,800,000 Baht
Management Baht/month

Human 25,000 2 25,000 x 2 x 12 months = 600,000 Baht

Resource Baht/month

Financial and 22,000 6 22,000 x 6 x 12 months = 1,584,000 Baht

Accounting Baht/month

General 18,000 10 18,000 x 10 x 12 months = 2,160,000 Baht

Administrations Baht/month

Library 15,000 6 15,000 x 6 x 12 months = 1,080,000 Baht

Management Baht/month

Facilitators 10,000 10 10,000 x 10 x 12 months = 1,200,000 Baht

Baht/month

Total Annual Salary 38 9,504,000 Baht

Our university hired total 38 employees for different kinds of management tasks and
operations. As shown in Table 1, employee salaries are calculated in details annually based
on their respective salary levels.

Currently, we have hired 96 lecturers for undergraduate level and 36 lecturers for
graduate level. One undergraduate lecturer teaches 4 sections standard to meet their normal
salary 40,000 Baht per month. One section for every subject is 60 hours long and divided
into 40 classes and each class is 1 hour and 30 minutes long where 2 classes are assigned to
teach every week. Undergraduate students have 2 semesters annually and each semester is 5
months long. They have 2 months for summer time where they take a break.

One graduate lecturer teaches 4 sections standard to meet their normal salary 80,000
Baht per month. Duration for one section is 45 hours long and divided into 15 classes and
duration for each class is 3 hours long and every class is taught every week. Graduate
students have a trimester system of 3 semesters annually and each semester is 4 months
long. They can take a semester break if they really need to. However, our calculations for
both undergraduate and graduate students are based on our assumption that students study in
all semesters. Table 2 illustrates all details regarding normal salaries for lecturers.

Table 2: Normal Salaries for Lecturers

 Undergraduate Lecturer Graduate Lecturer

Total Hours per section 60 hours / section 45 hours / section

Normal Sections per

4 sections / semester 4 sections / semester
lecturer

Number of Semesters 2 semesters per year 3 semesters per year

Salary Months 12 months 12 months

Normal Salary per

40,000 Baht / month 80,000 Baht / month
lecturer
Annual Salary per
480,000 Baht 960,000 Baht
lecturer

Number of Lecturers 96 36

Annual Salaries for All

46,080,000 Baht 34,560,000 Baht
Lecturers

All Total for both Undergraduate + Graduate 80,640,000 Baht

Table 3: Paid Rates for Extra Hours

Experience Level Undergraduate Lecturer Graduate Lecturer

Less than 2 years 250 Baht / hour 600 Baht / hour

3 to 5 years 300 Baht / hour 900 Baht / hour

5 to 10 years 350 Baht / hour 1,200 Baht / hour

10 to 15 years 400 Baht / hour 1,500 Baht / hour

More than 15 years 500 Baht / hour 1,800 Baht / hour

Table 4: Average Paid Rates for Extra Hours

Undergraduate Lecturer Graduate Lecturer
 Extra Hours 60 hours / Section 45 hours / section

Average Rate for

350 Baht / hour 1,200 Baht / hour
Extra Hour
Annual Extra Paid 21,000 Baht / semester x 2 54,000 Baht / semester x 2
per lecturer semesters = 42,000 Baht semesters = 108,000 Baht
Number of
96 36
Lecturers
Annual Extra Paid
4,032,000 Baht 3,888,000 Baht
for All Lecturers

Total Annual Extra Paid 7,920,000 Baht

Total Cost of Lecturers = Total Annual Salaries + Total Annual Extra Paid

= 80,640,000 + 7,920,000 Baht

= 88,560,000 Baht

We use average paid rates for extra teaching hours for calculating costs. At
maximum capacity, all lecturers have to work extra hours that is equal to 25% of their
normal workload. That means normal teaching hours is 240 hours for 4 sections and 60
hours extra for additional section for one Undergraduate lecturer. Altogether one lecturer
has 5 sections or 300 working hours for one semester at maximum capacity.

For the graduate lecturers, their 25% extra working hours are assigned for diploma
courses designed to offer in weekends and we have only 2 times (i.e. 2 semesters) for them
and we calculated the costs for extra working hours for 2 semesters in table 4. We use a
block-teaching method for diploma courses and every subject is taught in every month.
Diploma students need to study 6 subjects in 6 months in order to get their certificates.

We have 5 buildings which one building includes 4 floors. First floor is assigned for
library, management offices and general use. Other 3 floors are designed for classrooms and
each floor 4 classrooms. Total we have 60 classrooms in 5 buildings. One classroom can
hold maximum 50 students. For graduate students, one classroom can have maximum 25
students. For diploma students, one classroom is assigned maximum 15 students only. We
can handle total 4,800 undergraduate students, 900 graduate students, and 135 diploma
students.
We have adjusted the schedules for all students in the following way and illustrated
in table 5 to get a clear picture of schedule to fit into all 60 classrooms available. Thus, we
have maximum 60 classes conducted at the same time in one particular time, for example:
9:00 to 12:00 on Monday morning.
One Classroom = BBA 50 students maximum
(MBA 25 students maximum and Diploma 15 students)

Total Available = 60 Classrooms

Group A (5 subjects per student): BBA 3,000 students (60 classes x 50 students)

Group B (5 subjects per student): BBA 1,800 students (36 classes x 50 students)

Group C (4 subjects per student): MBA Day 600 students (24 classes x 25 students)

Group D (4 subjects per student): MBA Evening 300 students (12 classes x 25 students)

Group E: Diploma 135 students (9 classes x 15 students)

Table 5: Time Scheduling Sections for Different Subjects (Estimated)

9:00 to 12:00 12:00 to 14:00 14:00 to 17:00 18:30 to 21:30
Mon Group A NOT available Group A Group D
Tues Group B + C NOT available Group B + C Group D
Wed Group A NOT available Group A Group D
Thurs Group B + C NOT available Group B + C Group D
Fri Group B NOT available Group A
Sat Group E NOT available Group E NOT available
Sun Group E NOT available Group E NOT available

Estimating Maximum Capacity for Undergraduate Students

50 students x 60 lecturers (30 different subjects x 2 sections per subject) in one
batch, Group A and 50 students x 36 lecturers in another batch, Group B.
Group A: 3,000 students taking 5 subjects (sections) every semester i.e. every week
Group B: 3,000 students taking 5 subjects (sections) every semester i.e. every week
1 subject = 3 hours (separated into 2 classes or combined into 1 class) per week
Estimating Maximum Capacity for Graduate Students
 25 students x 24 lecturers (24 different subjects) = 600 students
600 students taking 4 subjects (sections) every semester i.e. every week
1 subject = 3 hours (with 15 minutes break time in between)
Estimating Maximum Capacity for Diploma Students
15 students x 9 lecturers (9 different subjects) = 135 students

M = Maximum Number of Undergraduate Students = 3,000 + 1,800 = 4,800

N = Maximum Number of Graduate Students = 600 + 300 = 900
O = Maximum Number of Diploma Students = 135
Total Maximum Capacity = M + N + O = 4,800 + 900 + 135 = 5,835 students

Identifying Fixed Costs

Direct Fixed Costs
Land Leasing (50 years) 100 Rai = 80 million Baht / year
Land Development = 8 million Baht / year
Depreciation for buildings = 10 million Baht per year
o 60 million Baht x 5 buildings
o Total Cost = 300 million Baht / 30 years useful life
Depreciation for Furniture = 1 million Baht per year
o 15 million Baht / 15 years
Depreciation for Air-conditioning systems = 200,000 Baht per year
o 20 years useful life
o 1 building = 4 floors
o 1 floor = 4 rooms
o 5 buildings
o 2 air-conditioners per room
o 25,000 Baht per air-conditioner (18,000 BTU)
o Total Cost = 5 buildings x 4 floors x 4 rooms x 2 air-con x 25,000 Baht per
air-con
Depreciation for Campus Network Facilities = 2.5 million Baht per year
o 20 million Baht / 8 years
Depreciation for Computer Facilities = 2 million Baht pear year
o 10 million Baht / 5 years

Total Direct Fixed Costs = 103,700,000 Baht

Indirect Fixed Costs

Library Books = 2 million Baht budgeted per year
o Estimated 1,000 books x 2,000 Baht per book
General Repair and Maintenance = 600,000 Baht per year
Building and facility Insurance = 1 million Baht per year
 Advertising = 500,000 Baht per year

Total Indirect Fixed Costs = 4,100,000 Baht

Total Fixed Costs = Total Direct Fixed Costs + Total Indirect Fixed Costs

= 103,700,000 + 4,100,000 Baht

= 107,800,000 Baht

Identifying Variable Costs

Student Activities
o 500 Baht per Student (compulsory fee)
Office Supplies (Stationaries)
o 100 Baht per Student
Facility Expense
o 100 Baht per Student
Electricity Usage
o 1,200 Baht per Student
Water Supply
o 240 Baht per Student
Office Salary (9,504,000 Baht / 5,835 Students)
o 1,628.79 Baht per Student
Lecturer Normal Salary (80,640,000 Baht per year / 5,835 Students)
o 13,820.05 Baht per Student
Lecturer Extra Paid (7,920,000 Baht per year / 5,835 students)
o 1,357.33 Baht per Student

Total Variable Cost per student = 18,946.17 Baht

Revenues
Table 6: Tuition Fees
Total Hours per Fees per University fee
Required course course per semester
Courses

Undergraduate 42 60 9,000 Baht 8,000 Baht

Graduate 16 45 16,000 Baht 10,000 Baht

Diploma 6 48 20,000 Baht -

Table 7: Semester Fees for New Students

 Undergraduate Graduate Diploma

Tuition fees 45,000 Baht 48,000 Baht 120,000 Baht

(5 courses x 9,000 (3 courses x 16,000 (6 courses x
Baht) Baht) 20,000 Baht)

Matriculation 5,600 Baht 7,200 Baht 8,600 Baht

University Fee 8,000 Baht 10,000 Baht -

Campus Network 1,000 Baht per 1,000 Baht per -

semester semester

Total Fees 59,600 Baht 66,200 Baht 128,600 Baht

Table 8: Semester Fees for Old students

Undergraduate Graduate

Tuition fees 45,000 Baht 48,000 Baht

(5 courses x 9,000 Baht) (3 courses x 16,000 Baht)

University Fee 8,000 Baht 10,000 Baht

Campus Network 1,000 Baht per semester 1,000 Baht per semester

Total fees 54,000 Baht 59,000 Baht

Table 9: Average Revenue per student

Undergraduate Graduate Diploma
 Freshman Student 59,600 Baht 66,200 Baht -
per semester

Existing Student 54,000 Baht 59,000 Baht -

per semester

Revenue for both 113,600 Baht 125,200 Baht -

Freshman +
Existing

Average Revenue 113,600 Baht 2 125,200 Baht 2

student students = 56,800 Baht students = 62,600
Baht

Semesters in a year 2 semesters 3 semesters 2 times (6-

month each)

Revenue per 113,600 Baht 187,800 Baht 128,600 Baht

student

Average Revenue (113,600 + 187,800 + 128,600) 3 = 143,333.33 Baht

for one student

We get average revenue 143,333.33 baht annually for each student by calculating the
average revenue of undergraduate, graduate and diploma students as shown in table 10. We
adjusted the revenue for undergraduate by averaging revenue from both freshman and
existing students.

Breakeven Point (in Number of Students)

X = number of students (at BEP)
Total Revenues = Total Direct Fixed Costs + Total Indirect Fixed Costs + Total Variable
Costs
143,333.33X = 103,700,000 + 4,100,000 + 18,946.17X
143,333.33X 18,946.17X = 107,800,000
124,387.16X = 107,800,000

X = 107,800,000 124,387.16
= 866.65 867 students

Breakeven Point (in Thai Baht)

Breakeven = 143,333.33 Baht per Student x 867 Students = 124,269,997.10 Baht
Margin of Safety (in Thai Baht)
Revenues (in maximum capacity)
= 143,333.33 Baht x 5,835 students
= 836,349,980.60 Baht

MS (in Thai Baht) = Revenues (in max capacity) BEP (in Thai Baht)
= 836,349,980.60 124,269,997.10
= 712,079,983.50 Baht

Margin of Safety (in Percentage)

MS% = MS in Thai Baht Revenues (in max capacity)
= 712,079,983.50 836,349,980.60 x 100
= 85.14%

Degree of Operating Leverage

Total Variable Costs
= 18,946.17 Baht x 5,835 Students
= 110,550,902 Baht

Total Contribution Margin

= Total Revenues Total Variable Costs
= 836,349,980.60 110,550,902
= 725,799,078.6 Baht

Total Fixed Costs

= Total Direct Fixed Costs + Total Indirect Fixed Costs
= 103,700,000 + 4,100,000
= 107,800,000 Baht

Net Income = Total Contribution Margin Total Fixed Costs

= 725,799,078.6 107,800,000
= 617,999,078.6 Baht

DOL = Total Contribution Margin Net Income

= 725,799,078.6 617,999,078.6
= 1.17

Table 9: Sales Mix (in Thai Baht)

Undergraduate Graduate Diploma Total
Revenues 545,280,000 Baht 169,020,000 17,361,000 Baht 731,661,000
Baht
(4,800 students x (135 Students x
113,600 Baht per (900 students x 128,600 Baht per
student) 187,800 Baht student)
per student)

Less Variable 90,941,614.4 Baht 17,051,552.7 2,557,732.9 Baht 110,550,900

Costs Baht
(4,800 x 18,946.17) (135 x
(900 18,946.17)
x18,946.17)

Total 454,338,385.6 Baht 151,968,447.3 14,803,267.1 621,110,100

Contribution Baht Baht
Margin

Less Total - - - 107,800,000

Fixed Cost

Net Income - - - 513,310,100

Overall CM in percentage = Overall Contribution Margin Total Revenues x 100%

= (621,110,100 731,661,000) x 100
= 84.89%

Sales Mix Breakeven in Thai Baht

= Total Fixed Costs Overall Contribution Margin in Percentage
= 107,800,000 84.89 % = 126,987,866.7

Sales Mix (Undergraduate) in Thai Baht

= (Revenue for Undergraduate Total Revenue) x Sales Mix Breakeven in Thai
Baht
= (545,280,000 731,661,000) x 126,987,866.7Baht
= 94,639,380.74 Baht

Sales Mix (Graduate) in Thai Baht

= (Revenue for Graduate Total Revenue) x Sales Mix Breakeven in Thai Baht
= (169,020,000 731,661,000) x 126,987,866.7Baht
= 29,335,292.04 Baht
Sales Mix (Diploma) in Thai Baht
= (Revenue for Diploma Total Revenue) x Sales Mix Breakeven in Thai Baht
= (17,361,000 731,661,000) x 126,987,866.7 Baht
= 3,013,193.752 Baht

Sales Mix (Undergraduate) in Percentage

= 94,639,380.74 126,987,866.7 x 100%
= 74.53%
Sales Mix (Graduate) in Percentage
= 29,335,292.04 126,987,866.7 x 100%
= 23.10%
Sales Mix (Diploma) in Percentage
= 3,013,193.752 126,987,866.7 x 100%
= 2.37%

Target Profit
Target Profit = Profit Before Tax = 400,000,000 Baht
Total Revenue
= (Total Fixed Cost + Profit Before Tax) Contribution Margin in
Percentage
= (107,800,000 + 400,000,000) 84.89%

= 598,185,887.62 Baht

Revenue from Undergraduate Student

= 598,185,887.62 x 74.53%
= 445,827,942 Baht
Revenue from Graduate Student
= 598,185,887.62 x 23.10%
= 138,180,940 Baht
Revenue from Diploma Student
= 598,185,887.62 x 2.37%
= 14,177,005.54 Baht
Number of Undergraduate Students
= Total Revenue from Undergraduate Revenue per Undergraduate Student
= 445,827,942 113,600
= 3,924.55 3,925 students
Number of Graduate Students
= Total Revenue from Graduate Revenue per Graduate Student
= 138,180,940 187,800
= 735.79 736 students
Number of Diploma Students
= Total Revenue from Diploma Revenue per Diploma Student
= 14,177,005.54 128,600
= 110.25 111 students
Total Number of Students = 3,925 + 736 + 111 = 4,772
In order to get our targeted profit amount 400 million baht, we need to have
altogether 4,772 students including 3,925 Undergraduate students, 736 Graduate students,
111 Diploma students.