Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 4 Comex Company produces backpacks. Annual budget data for FY 2021 follows. Projected sales are 50,000 backpacks for FY 2021. Show workings. Sales revenue

image text in transcribed

Question 4 Comex Company produces backpacks. Annual budget data for FY 2021 follows. Projected sales are 50,000 backpacks for FY 2021. Show workings. Sales revenue $2,500,000 Manufacturing costs: Fixed 632,000 Variable 500,000 Selling and Administrative costs: Fixed 200,000 Variable 700,000 (a) Use CVP analysis to determine the unit contribution margin, breakeven point in units and breakeven point in dollars. (9 marks) (6) Use CVP analysis to determine the profit for FY 2021. Ignore income taxes. (4 marks) c) Use CVP analysis to determine the number of required units if Comex Company plans to double the profit computed in Question 46. Ignore income taxes. (4 marks) (d) This question is independent of the earlier parts. Suppose there are two companies - Company A and Company B. They are identical in most aspects. Specifically, they sell the same products and have the same fixed expenses, unit variable expense, and net profit. However, Company A charges a lower price while Company B charges a higher price. Use CVP analysis to explain how Company A can earn the same profit as Company B despite charging a lower price for its products. (4 marks) This question is independent of the earlier parts. Suppose sales volume increase by the same percentage for Company X and Company Y. Use CVP analysis to explain which company will experience a larger percentage increase in profits? Company X - Dominated by fixed expenses, or Company Y-Dominated by variable expenses

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting A Comprehensive Guide For Beginners

Authors: Robert McCarthy

1st Edition

1638180474, 978-1638180470

More Books

Students also viewed these Accounting questions