Units as Horizontal Axis
Given the data below, create a CVP graph.
DATA
Total Fixed Costs $100,000
Unit Selling Price $50
Unit Variable Cost $30
Unit Contribution Margin $20
Chart Data Points
Quantity Unit
Variable
Cost Total
Variable
Cost Unit
Sales
Price Total
Sales Total
Costs
0 30 0 50 $ - 0 100000
1000 30 30000 50 $ 50,000 130000
2000 30 60000 50 $ 100,000 160000
3000 30 90000 50 $ 150,000 190000
4000 30 120000 50 $ 200,000 220000
5000 30 150000 50 $ 250,000 250000
6000 30 180000 50 $ 300,000 280000
7000 30 210000 50 $ 350,000 310000
8000 30 240000 50 $ 400,000 340000
9000 30 270000 50 $ 450,000 370000
10000 30 300000 50 $ 500,000 400000
#1 Put problem data at top of worksheet for use
#2 Create chart of data points in relevent range
#3 Create chart/graph
#4 Using either the chart wizard, or right clicking select data for the 2 Axis, the lines, and label the legend
#5 Using drawing tools and text boxes enter dotted lines, a
ows, and other labels within the chart….
C-V-P
Total Sales 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 0 50000 100000 150000 200000 250000 300000 350000 400000 450000 500000 Total Costs 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 100000 130000 160000 190000 220000 250000 280000 310000 340000 370000 400000 Variable Costs 0 30000 60000 90000 120000 150000 180000 210000 240000 270000 300000 Units
Total Sales and Costs
Break Even
Revenues as Horizontal Axis
Given the data below, create a CVP graph.
DATA
Total Fixed Costs $375,000
Unit Selling Price $1
Unit Variable Cost $0.55
Unit Contribution Margin $0.45
Chart Data Points
SALES Unit
Variable
Cost Total
Variable
Cost Unit
Sales
Price Total
Sales Total
Costs
0 0.55 0 $ - 0 375000
500000 0.55 275000 500000 650000
1000000 0.55 550000 1000000 925000
1500000 0.55 825000 1500000 1200000
2000000 0.55 1100000 2000000 1475000
#1 Put problem data at top of worksheet for use
#2 Create chart of data points in relevent range
#3 Create chart/graph
#4 Using either the chart wizard, or right clicking select data for the 2 Axis, the lines, and label the legend
#5 Using drawing tools and text boxes enter dotted lines, a
ows, and other labels within the chart….
C-V-P
Total Sales 0 500000 1000000 1500000 2000000 0 500000 1000000 1500000 2000000 Total Costs 0 500000 1000000 1500000 2000000 375000 650000 925000 1200000 1475000 Variable Costs 0 500000 1000000 1500000 2000000 0 275000 550000 XXXXXXXXXX 1100000 REVENUES
Total Sales and Costs
Break Even
Chapter 5 Cost-Volume-Profit Analysis
126
Critical thinking
Ct-1 LO 4 5
Vivian Lopez and Loren San will be opening a pastry store called Tasty Desserts. They are opening in two
weeks and have still not decided how much to charge for their cakes and how much they should spend on
advertisements and promotions.
The following information is available:
Tasty Dessert’s variable costs per cake $10
Tasty Dessert’s fixed costs for the year $12,500
Maximum production capacity for the year 5,000 cakes
Tasty Dessert’s selling price per cake ?
Advertising budget ?
Competitor’s selling price per cake (offer similar cakes as Tasty
Dessert’s) $20
The two owners had the following discussion regarding the selling price and advertising budget:
Vivian: Opening day is in two weeks! Loren, we really need to figure out how much we’ll be selling our
cakes for and our advertising budget.
loren: As a new store, I think we should charge the same rate as our competitors and advertise our store
on the radio and local review blogs. I anticipate that these advertising expenses will increase our fixed costs
y $3,000.
Vivian: Well, I think the best way to attract customers is to sell our cakes cheaper than anyone else. I’m
thinking we should charge 10% lower than our competitor’s rate. As for advertising, I don’t think we need
to spend money on advertisements at all. We can simply create a Facebook group and invite a bunch of
friends and families. This way, we will generate more sales. In fact, I think we can potentially increase sales
y 1,500 cakes.
loren: I agree that we will probably sell more cakes if we charge 10% lower than our competitors. However,
I don’t think we will be able cover our fixed costs if we reduce our prices.
We should also be concerned with
eaking even as quick as possible.
Whose suggested strategy should be recommended? Assume that 5,000 cakes will be sold.