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    Using CVP Analysis Example

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    ladsjovero6162
    Suppose the management anticipates selling 3,200 pairs of pants. Management is considering an advertising campaign that would cost $10,000. It is anticipated that the advertising will increase sales to 4,000 units.

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    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd

    Using CVP Analysis Example

    Uploaded by

    ladsjovero6162
    129 views4 pages
    Suppose the management anticipates selling 3,200 pairs of pants. Management is considering an advertising campaign that would cost $10,000. It is anticipated that the advertising will increase sales to 4,000 units.

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    © Attribution Non-Commercial (BY-NC)

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    Suppose the management anticipates selling 3,200 pairs of pants. Management is considering an advertising campaign that would cost $10,000. It is anticipated that the advertising will increase sales to 4,000 units.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    129 views4 pages

    Using CVP Analysis Example

    Uploaded by

    ladsjovero6162
    Suppose the management anticipates selling 3,200 pairs of pants. Management is considering an advertising campaign that would cost $10,000. It is anticipated that the advertising will increase sales to 4,000 units.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
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    Using CVP Analysis Example

    Suppose the management anticipates selling 3,200 pairs of pants. Management is considering an advertising campaign that would cost $10,000. It is anticipated that the advertising will increase sales to 4,000 units. Should the business advertise?
    2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster

    3-1

    Using CVP Analysis Example


    3,200 pairs of pants sold with no advertising: Contribution margin $89,600 Fixed costs 84,000 Operating income $ 5,600 4,000 pairs of pants sold with advertising: Contribution margin Fixed costs Operating income $112,000 94,000 $ 18,000
    3-2

    2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster

    Using CVP Analysis Example


    Instead of advertising, management is considering reducing the selling price to $61 per pair of pants. It is anticipated that this will increase sales to 4,500 units. Should management decrease the selling price per pair of pants to $61?
    2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster

    3-3

    Using CVP Analysis Example


    3,200 pairs of pants sold with no change in the selling price: Operating income = $5,600
    4,500 pairs of pants sold at a reduced selling price: Contribution margin: (4,500 $19) Fixed costs Operating income
    2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster

    $85,500 84,000 $ 1,500


    3-4

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