Question
Use the following contribution margin statement for 2009: Required: a) How much is the price per unit, unit variable cost and unit contribution margin? price=
Use the following contribution margin statement for 2009:
Required: a) How much is the price per unit, unit variable cost and unit contribution margin? price= unit VC= unit CM= b) Write down the CVP relation: profit as a function of sales volume in units (fill in the missing numbers in an equation like: Profit = 2 *Volume - 50). Profit = *Volume - c) If sales volume increases by 20% (from 100 to 120), how much is the $ change in profits? d) What is the sales volume required to achieve target profit of $2,100? e) How much is the breakeven volume? Breakeven revenue? f) How much is the margin of safety (at current sales volume of 100 units)? (enter percentages as a fraction of 1, i.e., enter 23.47% as 0.2347) g) Based on the margin of safety computed in (f), will you start making a loss if sales drop by 30%? (enter 1 for yes, 2 for no) h) How much is the operating leverage (at current sales volume of 100 units)? (enter percentages as a fraction of 1, i.e., enter 23.47% as 0.2347) If fixed costs increase, will it increase or decrease the operating risk? (enter 1=increase, 2=decrease)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started