Clearview Company is a manufacturer of blown glass vases. The following information pertains to Clearviews 2012 sales:
Question:
Clearview Company is a manufacturer of blown glass vases. The following information pertains to Clearview’s 2012 sales:
Sales price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65
Variable costs per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Total fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000
Required:
1. Determine Clearview Company’s per-unit contribution margin and contribution margin ratio.
2. Using the per-unit contribution margin and the contribution margin ratio, compute:
a. The break-even point in sales dollars and units
b. The sales volume (in dollars and units) needed to generate a target income of $75,000
3. Using the equation approach of C-V-P analysis, compute:
a. The break-even point in sales dollars and units
b. The sales volume (in dollars and units) needed to generate a 15% return on sales
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Step by Step Answer:
1 Sales price per unit 65 Variable costs per unit 52 Perunit contribution margin 13 Contribution mar...View the full answer
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
