You will create a scenario for a business or other organization and use CVP analysis to show the following:

1. Breakeven in units

2. Breakeven in dollars

3. Target sales in units for achieving a $50,000 target NI

4. Target sales in dollars for achieving a $50,000 target NI

5. You realize that your scenarios actual capacity is limited to its breakeven number of units (BEu, as calculated in #1 above). Calculate what the new sales price (SP) should be in order to achieve a $10,000 NI using the BEu (#1 above) for sales volume (Q) using the variable costs per unit calculated in step 1.

6. Same as #5, except this time calculate what the new variable cost per unit (VC) would need to be in order to achieve a $10,000 NI using the BEu (#1 above) for sales volume (Q) using the SP per unit in step 1.

Requirements:

1. Define each CVP variable for your scenario:

SP =

VC =

FC =

2. Calculate:

CM per unit =

CM ratio =

3. Calculate #1 6 above, showing all calculations