1) CVP Analysis

T-Mobile Manufacturing manufactures cell phone SIMs. Price and cost data for a relevant range extending to 200,000 units per month are as follows:

Sales price per unit (current monthly sales volume is 130,000 units) ............. $ 20.00

Variable costs per unit:

Direct materials ............................................................................................ $ 6.70

Direct labor .................................................................................................. $ 7.00

Variable manufacturing overhead ................................................................ $ 2.00

Variable selling and administrative expenses ....................................... ........ $ 1.80

Monthly fixed expenses:

Fixed manufacturing overhead $102,300

Fixed selling and administrative expenses ................................................... $187,800

Requirements:

1. What is the company's contribution margin per unit? (3 pts) Contribution margin percentage? (3 pts) Total contribution margin? (3 pts)

2. What would the company's monthly operating income be if the company sold 160,000 units? (5 pts)

3. What would the company's monthly operating income be if the company had sales of $4,500,000? (5 pts)

4. What is the breakeven point in units? (3 pts) In sales dollars? (3 pts)

5. How many units would the company have to sell to earn a target monthly profit of $260,100? (3 pts)