Case Gez Petrol

In: Business and Management

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GEZ PETROL STATION: USING COST-VOLUME-PROFIT ANALYSIS FOR PLANNING

By
KU NOR IZAH KU ISMAIL
(Corresponding author)
School of Accountancy
UUM College of Business
Universiti Utara Malaysia
E-mail: norizah@uum.edu.my
Tel: 04-9283906

And
WAN NORDIN WAN HUSSIN
Othman Yeop Abdullah Graduate School of Business
Universiti Utara Malaysia

GEZ PETROL STATION: USING COST-VOLUME-PROFIT ANALYSIS FOR PLANNING

INTRODUCTION

As an Area Manager of GEZ Bhd, a major oil company in Malaysia, in 2010, Mr Aiman was responsible for directing the sales activities of more than twenty petrol stations in the northern region of Malaysia. He was also responsible to train petrol station dealers and staff, initiate sales promotion and implement key initiatives to improve sales. Despite being a stable business with continuous increase in vehicles, often times, petrol station operators faced with the difficulty of sustaining the business, leading to the termination of the dealership license. The lack of knowledge in finance and costing, among others, contributed to business failures. Realising the importance of management accounting concepts and tools such as cost allocation and CVP analysis, Mr Aiman believed that the dealers and their relevant staff should have the knowledge in cost accounting. They should be able to differentiate between variable and fixed expenses, prepare a financial statement and perform a cost-volume-profit (CVP) analysis. To help the dealers perform the CVP analysis, an understanding of how to build and use a financial model associated with the analysis is an added advantage. In coming up with the data and building the financial model, Mr Aiman sought the assistance of Rizal, a trained management accountant.

GEZ PETROL STATIONS

GEZ developed and operated petrol stations under three basic concepts, namely Company Owned Station (COS), Partially…...

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