Introduction

This exercise is designed to assist you in building and applying your managerial accounting knowledge.

Cost$-$volume$-$profit analysis is an essential tool for managers to use when making decisions on sales mix,

product pricing, and allocation of scarce resources. This exercise applies cost$-$volume$-$profit analysis.

Assignment

Walter's Wiggles produces and sells bobbleheads. The selling price of each collectible bobblehead is $$80,$

and the variable cost per bobblehead is $$48.$ Fixed costs are $$4,000.$ Using this data, answer the following

questions:

P$1.$ What is the break$-$even point in units and dollars?

P$2.$ Create a contribution margin income statement at break$-$even.

P$3.$ If Walter sells $150$ bobbleheads, what will be his income?

P$4.$ If Walter has a contribution margin of $$6,400,$ how many bobbleheads did he sell?

P$5.$ If Walter's fixed costs change to $$4,640,$ how many additional units will he need to sell to break$-$even?