Question 1: CVP relation

Sales volume in units	100
Revenue	$7,000
Variable costs	$4,000
Contribution margin	$3,000
Fixed costs	$1,800
Profit	$1,200

a) Compute the following items: price= unit VC= unit CM= b) Write down the CVP relation. Profit = ___________ * volume - __________ (e.g., if Profit=4*volume-1000, enter 4 in the first box and 1000 in the second box). c) Predict profit at sales volume of 120 units: d) Your boss gave you a profit target of $2,100. How many units do you need to sell to meet this target? e) Compute the breakeven point: breakeven volume = breakeven revenue = f) Compute the margin of safety at current sales volume of 100 units: (e.g., if your answer is 20%, enter 20 without the % sign) If sales decrease by 35%, will you lose money? YES / NO If sales decrease by 45%, will you lose money? YES / NO g) When sales volume increases by 10 units (from any initial level in the relevant range), profit increases by:

price*10 = $700

unit VC*10 = $400

not enough informationunit

CM*10 = $300