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Ocean Company is conducting a cost-volume-profit (CVP) analysis and has just prepared the following budget information for the coming year: Product Line Alpha Beta Ceta
Ocean Company is conducting a cost-volume-profit (CVP) analysis and has just prepared the following budget information for the coming year: Product Line Alpha Beta Ceta Total $ $ $ $ Sales revenues 600,000 1,200,000 200,000 2,000,000 Less: variable costs 480,000 800,000 120,000 1,400,000 Contribution margin 120,000 400,000 80,000 600,000 Less: fixed costs 330,000 Net profit 270,000 The budget assumes the sale of 20,000 units of Alpha, 100,000 units of Beta, and 40,000 units of Ceta. Required: (a) Determine the overall contribution margin ratio the company's break-even point in total sales dollars. (4 marks) (b) Determine the company's break-even point in total units and individual product units at the budgeted sales mix. (10 marks) (c) If total sales volume is increased to 200,000 units with the same budgeted sales mix, calculate the total amount of contribution margin and the net profit earned. (6 marks)
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