Question
CVP Sensitivity Analysis (Single Product). Bridgeport Company has monthly fixed costs totaling $200,000 and variable costs of $40 per unit. Each unit of product is
CVP Sensitivity Analysis (Single Product). Bridgeport Company has monthly fixed costs totaling $200,000 and variable costs of $40 per unit. Each unit of product is sold for $50. Bridgeport expects to sell 30,000 units each month (this is the base case).
Required:
For each of the independent situations in requirements b through d, assume that the number of units sold remains at 30,000.
Prepare a contribution margin income statement for the base case.
Refer to the base case. What would the operating profit be if the unit sales price increases 10 percent?
Refer to the base case. What would the operating profit be if the unit variable cost decreases 20 percent?
Refer to the base case. What would the operating profit be if total fixed costs decrease 20 percent?
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