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    SCM: Cost Volume Profit Analysis

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    cyrellecelestino1998
    The document discusses break-even analysis and cost-volume-profit analysis for multiple products and companies. It includes calculations to determine break-even points, margins of safety, profits, and sales levels needed to achieve profit goals. Sample calculations are provided for units produced, sales revenues, variable costs, fixed costs, and profits.

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    SCM: Cost Volume Profit Analysis

    Uploaded by

    cyrellecelestino1998
    9 views2 pages
    The document discusses break-even analysis and cost-volume-profit analysis for multiple products and companies. It includes calculations to determine break-even points, margins of safety, profits, and sales levels needed to achieve profit goals. Sample calculations are provided for units produced, sales revenues, variable costs, fixed costs, and profits.

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    The document discusses break-even analysis and cost-volume-profit analysis for multiple products and companies. It includes calculations to determine break-even points, margins of safety, profits, and sales levels needed to achieve profit goals. Sample calculations are provided for units produced, sales revenues, variable costs, fixed costs, and profits.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    9 views2 pages

    SCM: Cost Volume Profit Analysis

    Uploaded by

    cyrellecelestino1998
    The document discusses break-even analysis and cost-volume-profit analysis for multiple products and companies. It includes calculations to determine break-even points, margins of safety, profits, and sales levels needed to achieve profit goals. Sample calculations are provided for units produced, sales revenues, variable costs, fixed costs, and profits.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    1.

    Break-Even and Cost-Volume-Profit Analysis:


    Millstone Company produces only one product. Normal capacity is 20,000 units per
    year, and the unit sales price is $5. Relevant costs are:
    Unit Variable Cost Total Fixed Cost
    Materials $1.00
    Direct Labor 1.20
    Factory overhead 0.50 $15,000
    Marketing expenses . 30 5,000
    Administrative expenses 6,000
    Required: Compute the following
    a. The break-even point in units of product
    b. The break-even point in dollars of sales
    c. The number of units of products that must be produced and sold to achieve a
    profit of $10,000
    d. The sales revenue required to achieve a profit of $10,000

    2. Margin of safety. Columbia Corporation plans sales of $2,000,000 for the coming
    period, which top management expects will result in a profit of $200,000. The break-even
    point has been determined to be $1,500,000 of sales.
    Required: Compute the margin of safety and the margin of safety ratio

    3. Break-even analysis and profit formula. A month’s operations of Williamson Company


    show fixed cost of $9,300, a Margin of safety ratio of 25%, and a contribution margin
    ratio of 62%.
    Required: Compute the following:
    a. Break-even sales
    b. Actual sales
    c. Profit for the month

    4. Break-even analysis and profit formula. Operations of Traveler Company for the year
    produced a margin of safety ratio of 20% and a contribution margin ratio of 60%. Fixed
    cost amounted to $30,000.
    a. Break-even sales
    b. The amount of profit
    c. The contribution margin

    5. Cost-Volume-Profit Analysis. Microchip Company is planning to produce and sell


    100,000 units of Chip A at $8 a unit and 200,000 units of Chip B at $6 a unit. Variable
    costs are 30% of sales for Chip A and 25% of sales for Chip B.
    Required: If total planned operating profit is $270,000, what must the total fixed cost be?
    (AICPA adapted)

    6. Break-even analysis with multiple products. Maybelle Furniture Company manufactures


    two products, tables and chairs. Tables sell for $110 each and chairs for $35 each. Four
    times as many chairs are sold each year as tables. Variable costs per unit are $50 and
    $20 for tables and chairs,respectively. Total fixed cost is $720,000.
    Required: Compute the break-even point in sales dollars and in units of product.

    7. Break-even and cost-volume-profit analysis. Nevada Company manufactures two


    products, L and M. L sells for $20 and M for $15. Variable costs per unit are $12 and $10
    for L and M, respectively. Total fixed cost is $372,000. Management has targeted profit
    for the coming period at $93,000. Two units of L are expected to sell for every three units
    of M sold during the period.
    Required: Compute the following
    a. The break-even point in units of product and in sales dollars
    b. The level of sales in units of product and dollars necessary to achieve the profit
    goal.

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