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    CVP Exercise

    Uploaded by

    Khiks Obias
    This document contains information about break-even analysis for three different companies. It provides sales, variable costs, contribution margin, fixed costs and net income for each company. It also calculates the units and dollar sales required to break-even. For the third company, it shows the contribution income statement and calculates the dollar sales and unit sales to break-even based on the contribution margin ratio.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    CVP Exercise

    Uploaded by

    Khiks Obias
    57 views7 pages
    This document contains information about break-even analysis for three different companies. It provides sales, variable costs, contribution margin, fixed costs and net income for each company. It also calculates the units and dollar sales required to break-even. For the third company, it shows the contribution income statement and calculates the dollar sales and unit sales to break-even based on the contribution margin ratio.

    Original Title

    CVP-EXERCISE

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    This document contains information about break-even analysis for three different companies. It provides sales, variable costs, contribution margin, fixed costs and net income for each company. It also calculates the units and dollar sales required to break-even. For the third company, it shows the contribution income statement and calculates the dollar sales and unit sales to break-even based on the contribution margin ratio.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    57 views7 pages

    CVP Exercise

    Uploaded by

    Khiks Obias
    This document contains information about break-even analysis for three different companies. It provides sales, variable costs, contribution margin, fixed costs and net income for each company. It also calculates the units and dollar sales required to break-even. For the third company, it shows the contribution income statement and calculates the dollar sales and unit sales to break-even based on the contribution margin ratio.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 7

    CVP Exercise

    800 units
    Sales $ 80,000
    Variable cost 32,000 Variable Cost = 18,500 + 13,500
    Contribution
    margin 48,000
    Fixed cost 32,000 Fixed Cost = 20,000 + 12,000
    Net income $ 16,000

    Fixed cost $ 96,000


    CM per unit 1.5

    unit sales to
    break-even = fixed cost/Contributin Margin per unit
    = $96,000/1.50
    = 64,000 units

    5,600 units
    Sales $ 672,000 sales = 5,600 x 120
    Variable cost 369,600 Variable Cost = sales x 55%
    Contribution
    margin 302,400
    Fixed cost 297,000
    Net income $ 5,400

    A.
    Variable cost
    per unit = $120 x 55% = $66
    $297,000/120 - 66
    Units = 5,500
    5,500 x $120
    Sales = $660,000
    B.
    Margin of safety in dollars: ($120 x 5,600) - $660,000 = $12,000
    dollar sales to
    break-even = fixed expenses/Contribution Margin ratio
    = $46,875/(100% - 37.5%)
    = $46,875/62.5%
    = $75,000 dollar sales

    incremental
    profit = 100 x ($6 - $2)
    = $400

    A.
    Ripple Company
    Contribution Income Statement
    Total CM ratio
    Net sales $ 2,100,000 100%
    Less: Variable costs
    Direct material 500,000
    Direct labor 300,000
    Manufacturing OH-variable 350,000
    Selling expenses-variable 90,000
    Administrative expenses-variable 20,000 1,260,000 60%
    Contribution margin 840,000 40%
    Less: Fixed costs
    Manufacturing OH-fixed 275,000
    Selling expenses-fixed 70,000
    Administrative expenses-fixed 50,000 395,000
    Net income $ 445,000

    B.
    dollar sales to unit sales to
    break-even = fixed expenses/CM ratio break-even = $987,500/$1
    = $395,000/40% = 987,000 units
    = $987,500 dollar sales

    C.
    Contribution
    margin ratio = contribution margin/sales
    = 840,000/2,100,000
    = 0.4 or 40%

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