Kappa Tech Solutions

Scenario: Cost-Volume-Profit (CVP) Analysis

Product Details:

• Product A:
  • Selling Price per Unit: $80
  • Variable Cost per Unit: $50
  • Fixed Costs: $120,000

• Product B:
  • Selling Price per Unit: $120
  • Variable Cost per Unit: $70
  • Fixed Costs: $180,000

Requirements:

1. Contribution Margin Calculation:
   • Calculate the contribution margin per unit and contribution margin ratio for Product A and Product B using marginal costing principles.

1. Break-Even Analysis:
   • Perform a break-even analysis to determine the number of units and sales revenue needed for Kappa Tech Solutions to break even, incorporating marginal costing insights.

1. Profitability Analysis:
   • Determine which product (Product A or Product B) generates higher profitability based on the contribution margin ratio calculated using marginal costing.

1. Sales Mix Analysis:
   • Conduct a sales mix analysis to identify the optimal sales mix that maximizes Kappa Tech Solutions' overall contribution margin, applying marginal costing concepts.

1. Strategic Pricing Decision:
   • Recommend a pricing strategy for Kappa Tech Solutions to achieve its profit target, considering the contribution margin analysis using marginal costing.