Cost Volume Profit Analysis of SEGi Education Group Essay

The first instruction Centre established in 1977 in the bosom of Kuala Lumpur known as Systematic Education Group by offered professional makings such as LCCI, ACCA and ABE. Today, the college win attained University College position and there are 6 campuses and 5 preparation Centres around Malaysia by offering an extended scope of classs in 13 Fieldss of surveies to an estimated of more than 18,500 pupils.


SEGi aspire to be the taking educational establishment with planetary accent.

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To authorise scholars with educational and developing excellence relevant to industry demands in lending positively to planetary communities.

In line with the group ‘s vision and mission to be the premier instruction and preparation supplier for all degrees of society, the group is committed to offering pupils a broad assortment of nationally and internationally recognized making classs taught by first-class lectors to give the abroad acquisition environment.

SEGi besides accent on the importance of basic theoretical cognition and expose to corporate every bit good as on the occupation preparation, in order to bring forth alumnuss who passes esteemed academic making, accomplishments competence, assurance and holistic characters.

Strengths and Failings of SEGi

As the competition in today ‘s instruction sector addition quickly, in order to prolong among the colleges and university, the internal analysis by compared with others rival could place what is the strengths and what is the failings existed in SEGi should be improved.


Provide instruction chances by offering low-cost fees and varies types of scholarships to financially destitute pupils to prosecute higher instruction in SEGi.

Partnerships with reputable planetary university such as UK, USA, Australia and India by offering more than 100 programmes and classs from pre-university/diploma to doctorate degree.

Fame with 30 old ages of first-class quality instruction has become the trademark of private higher instruction supplier in Malaysia.

All campuses are intentionally and strategically located in cardinal metropolis Centres in order to capture important mark markets in Peninsula and East Malaysia.


Broken installations and engineering such as deficiency of larning halls, activities topographic points, adjustment and hapless instruction equipment provided in SEGi.

Unsystematic and inefficiency direction of SEGi affect the feeling of pupils on SEGi ‘s public presentation.

Confronting the jobs of rawness lectors and ever deficiency with full clip lectors and staffs.

Pay attending on academic merely but ignore the importance of athleticss and general cognition in our life.

Cost-Volume-Profit ( CVP ) Analysis

In this coursework, cost-volume-profit analysis ( fiscal theoretical account ) selected to help in do a right pick and avoid dearly-won error in SEGi ‘s decision-making. There are two different positions of CVP theoretical account, which the sum cost and entire gross maps are curvilineal in economic expert ‘s theoretical account whereas comptroller ‘s theoretical account assumes additive relationships ( Appendix A ) .

Economist ‘s attack is looking at the longer term by consider company ‘s entire costs and entire grosss but Accountant ‘s attack is merely intended to supply an estimate of gross and cost behavior over the relevant scope in the short term ( The non-hub narrative, 2007 ) .

Purposes of CVP Analysis

The aim of CVP analysis is to set up what will go on to the fiscal consequences if a specified degree of activity or volume fluctuates ( Drury Colin, 2003 ) . It is helpful to measure the effects of prognosis alterations in gross revenues, variable cost and fixed costs. The analysis usually used in doing determinations refering pricing of merchandises, pick of merchandise lines, and use of production installations. ( The non-hub narrative, 2003 )

Through the CVP analysis, SEGi would be able to place the degrees of operating activity needed to avoid losingss, achieve targeted net incomes, program future operations, and monitor organisational public presentation. ( The non-hub narrative, 2004 )

Breakeven Analysis

To be after for the hereafter for SEGi, it is of import to cognize whether the current operation is profitable as a whole. The breakeven chart plotted in Appendix D has shown the relationship between entire classs fees, entire figure of pupils, entire variable costs and entire fixed costs occurs in SEGi is either loss or net income within the relevant scope. The term relevant scope referred to the end product scope at which the house expects to be runing within a short-run planning skyline ( Colin )

From the breakeven chart, break-even analysis predicts the 8744 figure of pupils required, at a given class fee of RM 36,800 per pupils, required to retrieve the sum costs. In other words, it is the breakeven point that is the spliting line between operating at a loss and operating at a net income. Where the figure of pupils is below 8744 pupils, loss will be incurred whereas there will be a net income if exceeds of more than 8744 pupils. SEGi might be face hazards if increase the fixed cost/courses fee, because the breakeven point is about over the end product scope and the net incomes may go less and less. Planing to run merely merely above the figure of pupil necessary in order to interrupt even may bespeak that it is a hazardous venture, since merely a little autumn from the program could take to lose.

The utility of being able to infer the BEP is that it makes it possible to compare the planned or expected volume of activity with the BEP and so do a opinion about hazard ( Atrill.P & A ; McLaney.E 2008 ) . Therefore, varies alterations can be applied on the different sum classs fee, variable costs, fixed costs and border of safety to demo the possible interrelatedness.

In order to obtain a lower breakeven point and higher net income, it is suggested to take down the fixed costs but increase the variable costs of SEGi. If it is possible to cut down variable costs, so the part per unit will be addition. SEGi will make the breakeven point at a lower figure of pupils and will so gaining net incomes at a faster rate. Furthermore, the entire classs fee would cover the entire costs faster if the entire fixed costs lessening and less than 8744 figure of pupils required making the net incomes.

Compared with Appendix D and F, appendix F gives a lower breakeven point below the relevant scope, higher net incomes and greater border of safety whereas the existent figures from SEGi ( Appendix D ) show a high breakeven point and little border of safety.

Margin of Safety

The border of safety is the difference in units between the budgeted gross revenues volume and the breakeven gross revenues volume and it is sometimes expresses as a per centum of the budgeted gross revenues volume ( ACCA Study Text 2001 ) . It is a unsmooth step of the hazard that SEGi might do a loss if it fails to accomplish its budget.

By compare the per centum border of safety ( Appendix E ) , most people would prefer the false figures, since the border of safety between the expected Numberss of pupil and breakeven is much greater. Thus, for the same degree of return the hazard will be lower by lessening the fixed costs but increase the variable costs.


Referred to the Appendix G, at the breakeven point, the part peers fixed costs precisely. At degrees of end product above the breakeven point, the part is larger, and non merely covers fixed costs, but besides leaves a net income. Below the breakeven point, the loss is the sum by which part fails to cover fixed cost.

The advantage of this signifier of presentation is that the entire part is emphasized in the graph, and is represented by the difference between the entire gross revenues gross line and the entire variable cost line ( TR-TC line ) . It contributes to run into the fixed costs and, if there is any extra, it besides contributes to gain.

Net income Volume Chart

To determine the net income or loss figures from a breakeven chart, it is necessary to find the difference between the total-cost and entire classs fee lines. The profit-volume graph is a more convenient method of demoing the impact of alterations in volume on net income. From the graph ( Appendix I ) , it show clearly the consequence on net income and breakeven point of any alterations in entire classs fee, variable cost, fixed cost and figure of pupils. As the figure of pupil additions, the sum of the loss bit by bit decreases until BEP is reached. Beyond BEP, net incomes additions as the figure of pupil additions.

Targeted Net income

CVP analysis is besides used to find what degree of gross revenues is necessary to make a targeted degree of net income. To accomplish the net income, entire classs fee gained must cover all costs and leave the needed net income. Harmonizing the Appendix J, SEGi have to pull 14,744 Numberss of pupils in order to run into a RM 75,000,000 net incomes. Therefore, SEGi could be after for future scheme by compare the figure of pupil, courses fee and targeted net incomes to make the targeted ends.

Premises of CVP analysis

The Courses fee per pupil, Variable costs per pupil and entire fixed costs are considered changeless.

CVP analysis applies merely to a short-run skyline.

All costs can be accurately split into fixed and variable costs and merely affected because the alterations of figure of pupil

The classs fee does non alter as the alterations of volume of pupil

Failings of CVP Analysis

CVP provide tonss of utile expression and use, nevertheless, have its failings. For Example, SEGi provide more than one instruction and the different classs provide different fixed costs, selling monetary value and variable costs. There is a job to placing the fixed of one specific as the fixed costs tend to associate to more than one classs.

The fixed costs assumed remains changeless in CVP analysis are wrong because most fixed costs are non fixed over all figure of pupils. They tend to be stepped in different period because of farther enlargement occurred. The job is peculiarly heighted because most activities will probable in assorted type of fixed costs, all of which likely to hold stairss at different point.

The normal attack to breakeven analysis assumes that the relationships between gross revenues gross, variable costs, and volume are purely straight-line 1s. In existent life this is improbable to be so because at high degrees of end product economic systems of graduated table may be available to an extent non available at lower degrees.


From the CVP analysis above, it is suggested to do some alterations on classs fee, fixed cost and variable costs to better the efficiency and operation of SEGi. By lower the fixed costs such as the


Undoubtedly, CVP analysis is peculiarly good suited to direction demands in short term determination devising, future planning, pricing determination and earned targeted net incomes. It makes usage of graphs and chart to analyze the consequence of the alterations of entire costs, entire classs fee and net incomes occurred in SEGi by include all the classs fee, variable costs and fixed cost. The breakeven chart, part chart and net income volume graph highly helpful in showing direction accounting information and easier understood by non-financial directors who are involved in doing determinations which have fiscal effects.

Premises List

All of the figures used in this coursework are simply premises.

In this coursework, the figures have been round up to the nearest 1000.

The currency of Ringgit Malaysia ( RM ) is used.


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