This exercise is designed to assist you in building and applying your managerial accounting knowledge. Cost-volume-profit analysis is an essential tool for managers to use when making decisions on sales mix, product pricing, and allocation of scarce resources. This exercise applies cost-volume-profit analysis.

Assignment

Walters Wiggles produces and sells bobbleheads. The selling price of each collectible bobblehead is $80, and the variable cost per bobblehead is $48. Fixed costs are $4,000. Using this data, answer the following questions:

P1. What is the break-even point in units and dollars?

P2. Create a contribution margin income statement at break-even.

P3. If Walter sells 150 bobbleheads, what will be his income?

P4. If Walter has a contribution margin of $6,400, how many bobbleheads did he sell?

P5. If Walters fixed costs change to $4,640, how many additional units will he need to sell to break-even?