Sports-Reps, Inc., represents professional athletes and movie and television starts. The agency had revenue of $12, 345,000 last year, with total variable costs of $5, 678, 700 and fixed costs of $2, 192, 400. Required: What is the contribution margin ratio for sports-Reps based on last year's data? What is the break-even point in sales revenue? What was the margin of safety for Sports-Reps last year? One of Sports Rep's agents proposed that the firm begin cultivating high school sports stars around the nation. This proposal is expected to increase revenue by $230,000 per year, with increased fixed cost of $122, 500. Is this proposal a good idea? Explain. Break-Even in Units, After-Tax Target Income, CVP Assumptions Campbell Company manufactures and sells adjustable that attach to motor homes and trailers. The market covers both new unit and purchases as well as replacement canopies. Campbell developed its 2013 business plan based on the assumption that canopies would sell at a price of $400 each. The variable costs for each canopy were projected at $200, and the annual fixed costs were budgeted at $120,000. Campbell's after-tax profit objectives was $225,000; the company's effective tax rate is 40 percent. While Campbell's sales usually rise during the second quarter, the May financial statements reported that sales were not meeting expectations. For the first five months of the year, only 350 units had been sold at the established price, with variable costs as planned, and it was clear that the 2013 after-tax profit projection would not be reached unless some actions were taken. Campbell's president assigned a management committee to analyze the situation and develop several alternative courses of action. The following mutually exclusive alternatives, labeled A, B, and C, were presented to the president: A. Lower the variable costs per unit by $25 through the use of less expensive materials and slightly modified manufacturing techniques. The sales price will also be reduced by $30, and sales of 2, 200 units for the remainder of the year are forecast. B. Reduce the sales price by $40. The sales organization forecasts that with the significantly reduced sales price, 2, 700 units can be sold during the remainder of the year. Total fixed and variable unit costs will stay as budgeted. C. Cut fixed costs by $10,000, and lower the sales price by 5 percent. Variable costs per unit will be unchanged. Sales of 2,000 units are expected for the remainder of the year. Required: 1. Determine the number of units that Campbell Company must sell in order to break even assuming no changes are made to the selling price and cost structure. Determine the number of units that Campbell Company must sell in order to achieve its after-tax profit objective. 3 Determine which one of the alternatives Campbell Company should select to achieve annual after-tax profit objective. Be sure to support your selection with appropriate calculations. The precision and reliability of CVP analysis are limited by several underlying assumptions, Identify at least four of these assumptions. (CMA adapted) CVP: Before- and After-Tax Targeted Income Head-Gear Company produces helmets for bicycle racing, Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $80.50 per helmet, and fixed costs are $1, 255, 800. The tax rate is 25 percent. Last year, 14,000 helmets, and fixed costs are $1, 255, 800. The rate is 25 percent. Last year, 14,000 helmets were sold