2 Problem 8-8 Performing a Comprehensive CVP Analysis (LO2 - CC5, 6) EDITED The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. 6 points Skipped eBook Print Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses Shipping expense Advertising expense Salaries and commissions Insurance expense Amortization expense Total operating expenses Net income Central Valley Company Comparative Income Statement March 5,600 April 5,100 $ 728,000 386,900 $ 663,000 358,020 May 6,150 $ 799,500 415,740 June 7,200 $ 936,000 477,360 $ 341,100 $ 304,980 $ 383,760 $ 458,640 $ 66,200 79,000 12,000 140,000 12,000 79,000 164,500 12,000 12,000 45,000 45,000 45,000 45,000 $ 361,300 $ 330,800 $ 366,700 $ 381,500 $ 68,000 79,000 177,500 $ 62,700 $ 54,800 79,000 162,600 $ (20,200) $ (25,820) $ 17,060 $ 77,140 References Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. (Do not round intermediate calculations. Round "Per Unit" answers to 2 decimal places.) HINT:Use the hi-low method from chapter 6. Cost of goods sold Shipping Salaries & commission +++ per unit per unit per unit 6 2 2. Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 72,000 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.) points Skipped eBook Print References Break-even sales Annual profit (72,000 units) units 3. Calculate the change in profit if the selling price were reduced by $7.00 each and annual sales were to increase by 6,200 units. 4. Determine the change in profit if the company were to increase advertising by $106,000 and if this were to increase sales by 6,200 units.