Cost Estimation and CVP Analysis

MA15-41. Cost Estimation and CVPAnalysis (LO2, 3, 4) Presented are the 2012 and 2013 functional income statements of Regional Distribution, Inc.: REGIONAL DISTRIBUTION, INC Functional Income Statements For Years Ending December 31, 2012 and 2013 2012 2013 $5,520,000 $5,000,000 Expenses $3,750,000 200,000 50,000 100,000 ....80,000 250,000 Depreciation . .. 80,000 250,000 (4,857,900) 662,100 (264,840) (4,430,000) Before-tax profit.. 570,000 (228,000) After-tax profit . $ 397,260 $ 342,000 Required a. Determine Regional Distribution's break-even point in sales dollars. b. What dollar sales volume is required to earn an after-tax profit of $480,000? c. Assuming budgeted 2014 sales of $6,000,000, prepare a 2014 contribution income statement d Discuss the reliability of the calculations in requirements a-c, including the limitations of the CVP model and how they affect the reliability of the model