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    CVP Analysis Learning Exercises

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    SUNNY BHUSHAN
    Exercise 1 provides data on a company that sells a decorative plate for $10 with variable costs of $6. It has monthly fixed expenses of $7,500. You must calculate the break-even points in units and dollars and how they change with a $500 increase in fixed costs. Exercise 2 gives data for a company with a product price of $200 and variable costs of $150. With monthly fixed expenses of $75,000, you must calculate the unit sales needed for a $9,000 profit and dollar sales for a $10,000 profit. Exercise 3 provides contribution format income statements for two video games. You must calculate the overall contribution margin ratio and break-even point in dollars

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    CVP Analysis Learning Exercises

    Uploaded by

    SUNNY BHUSHAN
    33 views3 pages
    Exercise 1 provides data on a company that sells a decorative plate for $10 with variable costs of $6. It has monthly fixed expenses of $7,500. You must calculate the break-even points in units and dollars and how they change with a $500 increase in fixed costs. Exercise 2 gives data for a company with a product price of $200 and variable costs of $150. With monthly fixed expenses of $75,000, you must calculate the unit sales needed for a $9,000 profit and dollar sales for a $10,000 profit. Exercise 3 provides contribution format income statements for two video games. You must calculate the overall contribution margin ratio and break-even point in dollars

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    Cvp Analysis Learning Exercises

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    Exercise 1 provides data on a company that sells a decorative plate for $10 with variable costs of $6. It has monthly fixed expenses of $7,500. You must calculate the break-even points in units and dollars and how they change with a $500 increase in fixed costs. Exercise 2 gives data for a company with a product price of $200 and variable costs of $150. With monthly fixed expenses of $75,000, you must calculate the unit sales needed for a $9,000 profit and dollar sales for a $10,000 profit. Exercise 3 provides contribution format income statements for two video games. You must calculate the overall contribution margin ratio and break-even point in dollars

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    33 views3 pages

    CVP Analysis Learning Exercises

    Uploaded by

    SUNNY BHUSHAN
    Exercise 1 provides data on a company that sells a decorative plate for $10 with variable costs of $6. It has monthly fixed expenses of $7,500. You must calculate the break-even points in units and dollars and how they change with a $500 increase in fixed costs. Exercise 2 gives data for a company with a product price of $200 and variable costs of $150. With monthly fixed expenses of $75,000, you must calculate the unit sales needed for a $9,000 profit and dollar sales for a $10,000 profit. Exercise 3 provides contribution format income statements for two video games. You must calculate the overall contribution margin ratio and break-even point in dollars

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    CVP ANALYSIS LEARNING EXERCISES

    (from Brewer’s)

    EXERCISE 1
    Allwill Products distributes a single product, a decorative plate whose selling price is $10 and whose variable cost is
    $6 per unit. The company’s monthly fixed expense is $7,500.
    Required:
    1. Calculate the company’s break-even point in unit sales.
    2. Calculate the company’s break-even point in dollar sales.
    3. If the company’s fixed expenses increase by $500, what would become the new breakeven point in unit
    sales? In dollar sales?

    EXERCISE 2
    Stepman Corporation has a single product whose selling price is $200 and whose variable expense is $150 per unit.
    The company’s monthly fixed expense is $75,000.
    Required:
    1. Calculate the unit sales needed to attain a target profit of $9,000.
    2. Calculate the dollar sales needed to attain a target profit of $10,000.

    EXERCISE 3
    Shamrock Products markets two video games: Running and Skiing. A contribution format
    income statement for a recent month for the two games appears below:
    Running Skiing Total

    Sales $120,000 $40,000 $160,000

    Variable expenses 55,000 17,000 72,000

    Contribution margin $ 65,000 $23,000 88,000

    Fixed expenses 41,250

    Net operating income $ 46,750

    Required:
    1. Compute the overall contribution margin (CM) ratio for the company.
    2. Compute the overall break-even point for the company in dollar sales .
    3. Verify the overall break-even point for the company by constructing a contribution format
    income statement showing the appropriate levels of sales for the two products.

    EXERCISE 4
    Fill in the missing amounts in each of the four case situations below. Each case is independent of the
    others. (Hint: One way

    to find the missing amounts would be to prepare a contribution format income statement for each case,
    enter the known data,and then compute the missing items.)

    Case Units Sales Variable Contribution Fixed Net Operating


    Sold Expenses Margin per Unit Expenses Income
    A 20,000 $300,000 $220,000 ? $45,000 ?
    B 12,000 ? $120,000 $15 ? $18,000

    Case Sales Variable Average Contribution Fixed Net Operating


    Expenses Margin Ratio Expenses Income

    C $900,000 ? 40% ? $125,000

    D ? ? 45% $120,000 $37,500

    EXERCISE 5
    The following data from the just completed year are taken from the accounting records of Kenton Company:

    Sales $ 975,000

    Direct labor cost $ 165,000

    Raw material purchases $ 229,000

    Selling expenese $ 48,750

    Administrative expenses $ 146,250

    Manufacturing overhead applied to work in process $ 180,000

    Actual manufacturing overhead costs $ 175,050


    Inventories: Beginning Ending

    Raw materials $ 18,000 $ 17,500

    Work in process $ 20,000 $ 14,750

    Finished goods $ 9,000 $ 11,000

    Required:
    1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.
    2. Prepare a schedule of cost of goods sold. Assume that the company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.
    3. Prepare an income statement.

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