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COSTS VARIABLE Cost FIXED Cost per Description per unit Year Direct Material $1.75 Direct Labor $1.65 Indirect Material 9,060 Indirect Labor 60,000 Machine Maintenance $0.04

COSTS VARIABLE Cost FIXED Cost per

Description per unit Year

Direct Material $1.75

Direct Labor $1.65

Indirect Material 9,060

Indirect Labor 60,000

Machine

Maintenance $0.04

Electricity $0.07

Depreciation 6,360

Quality Testing $0.04 1,680

TOTAL $3.55 77,700

If a cost is mixed, put the fixed amount in the fixed column and the variable amount in the variable column.

CVP Calculations:

1.Cost-Volume-Profit (CVP) Relationships

a.Selling Price:You sell a box of cereal for $5.75

b.Breakeven point: Calculate the breakeven point. Be sure to include the fixed component of mixed cost in your fixed costs and the variable component in the variable cost.Show your breakeven in Sales units and in Sales Dollars

c.Profit Planning:Determine the number of units you must sell to make an annual pre-tax profit using 3 assumptions concerning your net income (profit), both in sales units and sales dollars.

i.Aggressive Profit ($400,000)

ii.Conservative Profit ($100,000)

iii.Average Profit ($274,300)

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