Management Development

Program
Cost Structure and Revenue Stream

Switomo Santoso AK., MBA, CPMA, CFP®

Adv. Cert. SCMP℗(ITC), AEPP™, QWP
 Cost Behavior Summary

Summary of Variable and Fixed Cost Behavior

Variable Costs Fixed costs

Remains the same even Decreases as activity level

Per Unit
when activity level changes. increases.
Changes as activity level Remains the same over wide
Total
changes. ranges of activity.

2
 Semi-variable (Mixed) Costs

Costs that have both a variable cost element and a fixed cost element.

Sometimes called semi-variable cost.

Change in total but not proportionately with changes in activity level.

THE CONCEPT OF CONTRIBUTION MARGIN

INFORMASI BIAYA UNTUK PERUSAHAAN

Total Per Unit Percent

Sales (500 unit) $ 250,000 $ 500 100%
Less: variable expenses 150,000 300 60%
Contribution margin $ 100,000 $ 200 40%
Less: fixed expenses 80,000
Net operating income $ 20,000

Contribution margin menekankan perilaku biaya.

Contribution margin harus bisa menutup fixed costs
4
BREAK EVEN POINT

BIAYA TOTAL

Rp

TR

Unit TOTAL PENERIMAAN = TOTAL BIAYA

PENERIMAAN TOTAL

5
 Product development and planning
• Not all products will follow this R&D cost, product testing cost
pattern
• Some products will fail early and
have a truncated life cycle
Implementation phase
• Five Stages in product life cycle
Promotional cost
– Product development and
planning
– Introduction phase Growth phase
– Growth phase Flexible and capacity related cost
– Product maturity phase
– Product decline and
abandonment phase Maturity phase
Product margin is low due to high price
competition

Decline and abandonment phase

Abandonment costs
 The Basic Cost Drivers
• Workforce of involvement / participation –
commitment to continual improvement
• Total Quality Management – belief and
achievement regarding product quality
• Capacity Utilization
• Plant Layout Efficiency
• Product Configuration (design or formulation)
• Linkages with suppliers / consumers
Some Examples of Cost Drivers
# of domestic customers
# of export customers
# of orders placed
# of orderlines - domestic
# of orderlines - export
# of machine set-ups
# of production defects
# of schedules placed
# of units processed
# of new products introduced
# of supplier late deliveries
# of schedule changes
# of supplier defects
# of order lines - goods In
# of inspections
# of cash payments in
# of new accounts set-up
# of account closures
# of customer claims made
# of refunds
# of invoices processed
# of customer returns
# of customer enquiries
# of customer complaints
# of telephone calls received
# of policies issued
# of cheques processed
# of direct debits
# of late payments
# of terminals connected
 Pilih Salah Satu Kasus
• Anda sedang mempertimbangkan untuk melakukan
outsource atas suatu fungsi yang selama ini dilakukan in-
house, biaya apa saja yang Anda perhitungkan ? Faktor
kualitatif apa yang akan Anda pertimbangkan ?
• Anda sedang mereview salah satu produk Anda, apakah
menguntungkan atau malah menggerogoti profit Anda.
Langkah-langkah apa yang akan Anda lakukan ? Faktor apa
saja yang harus diperhitungkan ?
• Anda ingin mengadakan Cost Reduction Program di
departemen Anda. Langkah apa yang akan Anda lakukan ?
Biaya-biaya mana yang menjadi prioritas Anda?
• Anda sedang mempertimbangkan apakah akan menjual
sebuah kavling apa adanya atau mengembangkannya lebih
lanjut, faktor apa saja yang harus Anda perhitungkan ?
• Seorang spekulator besar ingin membeli 25% dari seluruh
produk baru Anda dan meminta harga khusus. Bagaimana
Anda menentukan harga yang bisa ditawarkan ?
 REVENUE STREAMS
• Sale of Product / Service
• Usage fees
• Subscription fees
• Lending/ Renting/ Leasing
• Licensing
• Brokerage fees
• Advertising
 The Concept of Return On
Investment
• Also called Return On Asset

• Net Income

• Asset

• Net Income / Asset (average)

Sources of Good Projects
• Economies of Scale

• Cost Advantages
• Product /Service Differentiation
• Access to Distribution Channels
• Legal and Government Barriers
• Innovation
• Locate an unsatisfied demand

12
 PROFIT vs CASHFLOW
• Accounting vs Finance

• Non-cash items

• Working Capital

• Capital Expenditure
The Role of Time Value in Finance
• Most financial decisions involve costs & benefits that
are spread out over time.
• Time value of money allows comparison of cash flows
from different periods.

• Question: Your father has offered to give you some

money and asks that you choose one of the following
two alternatives:
– $1,000 today, or
– $1,100 one year from now.
• What do you do?

14
 Computational Aids
Compounding and Discounting
 Basic Concepts
• Future Value: compounding or growth over time

• Present Value: discounting to today’s value

• Single cash flows & series of cash flows can be

considered

• Time lines are used to illustrate these relationships

16
• ELI & Present
Co has been offered
Value ofana opportunity
Mixed Stream
to receive the following mixed stream of
cash flows over the next 5 years.

17
 Present Value of a Mixed Stream
• If the firm must earn at least 9% on its investments, what
is the most it should pay for this opportunity?
• This situation is depicted on the following time line.

18
 Capital Budgeting Techniques
Bennett Company is a medium company that is
currently contemplating two projects: Project A requires
an initial investment of $42,000, project B an initial
investment of $45,000. The relevant operating cash
flows for the two projects are presented

19
 Capital Budgeting Techniques (cont.)
Bennett Company’s Projects A and B
Assuming cost of capital = 10%

20
Net Present Value (NPV) (cont.)
Calculation of NPVs for Bennett Company’s Capital Expenditure
Alternatives

21
Excel Formulas
A B
• Rumus NPV di Excel mencari 1 Year Cashflow
Present Value dari beberapa
cashflow di masa mendatang. 2 0 -45000
NPV di Excel tidak sama 3 1 28000
dengan NPV secara financial
• Misal B2 = Initial Investment 4 2 12000
(minus) 5 3 10000
• Misal B3:B7 = arus kas di 6 4 10000
periode berikutnya
• Mencari Present Value dari 7 5 10000
beberapa cashflow: BIAYA
=NPV(biaya modal, B3:B7) MODAL 10%
• Mencari NPV: =NPV(biaya
modal, B3:B7) – Initial PRESENT
Investment VALUE 55,924
NPV 10,924
 Relationship Between NPV and
the Required Rate of Return
General decision rule . . .
If the Net Present
Value is . . . Then the Project is . . .
Acceptable, since it promises a
Positive . . . return greater than the required
rate of return (discount rate).

Acceptable, since it promises a

Zero . . . return equal to the required rate of
return (discount rate).

Not acceptable, since it promises

Negative . . . a return less than the required rate
of return (discount rate).

23
Kita tidak perlu
menjadi
“rajawali” untuk
mengawali

TETAPI KITA HARUS BERANI MENGAWALI

UNTUK MENJADI “RAJAWALI”

- SWITOMO SANTOSO AK MBA, CPMA, CFP®, AEPP, QWP 24