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Project Summary: The following data is provided for a product to complete a cost-volume-profit analysis. Original Data Sales price per unit $50.00 Variable costs per unit $23.00 Fixed Costs $5,500...

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Project Summary:

The following data is provided for a product to complete a cost-volume-profit analysis.

Original Data

Sales price per unit $50.00

Variable costs per unit $23.00

Fixed Costs $5,500

Monthly Volume 250 units sold

Target Profit Per Month $1,700

Assumption Changes

Expected Increase in Monthly Volume 10%

Expected Increase in Variable Cost 2%

Project Requirements:

Complete the following for the original data and for the assumption change. In your project submission, there will be two sets of calculations and one contribution margin income statement:

  • Calculate the Contribution Margin in Units and Contribution Margin Ratio
  • Calculate the Breakeven Point in Units Sales and Sales Dollars
  • Calculate the Target Sales in Units and Dollars
  • Calculate the Margin of Safety in Units and Margin of Safety Percentage
  • Calculate the Operating Leverage
  • Prepare a Contribution Margin Income Statement for the assumption change only.

Rubric

CVP Analysis RubricCVP Analysis Rubric
CriteriaRatingsPts
This criterion is linked to a Learning OutcomeOriginal Data - Calculation of Contribution Margin Ratio (3 points)Objectives Compute the contribution margin ratiothreshold:2.0pts3pts
This criterion is linked to a Learning OutcomeOriginal Data - Calculation of Break-even Point (3 points)Objectives Determine the break-even point in units and dollars threshold:2.0pts3pts
This criterion is linked to a Learning OutcomeOriginal Data - Calculation of Target Sales (3 points)Objectives Determine the level of sales needed to achieve a desired target profit in units and dollarsthreshold:2.0pts3pts
This criterion is linked to a Learning OutcomeOriginal Data - Calculation of Operating Leverage (3 points)Objectives Compute the degree of operating leverage at a particular level of salesthreshold:2.0pts3pts
This criterion is linked to a Learning OutcomeAssumption Change - Calculation of Contribution Margin Ratio (3 points)Objectives Calculate the contribution margin ratio Use the contribution margin ratio to compute changes in contribution margin and net operating income resulting from changes in sales volume threshold:2.0pts3pts
This criterion is linked to a Learning OutcomeAssumption Change - Calculation of Break-even Point (3 points)Objectives Determine the break-even point in units and dollarsthreshold:2.0pts3pts
This criterion is linked to a Learning OutcomeAssumption Change - Calculation of Target Sales (3 points)Objectives Determine the level of sales needed to achieve a desired target profit in units and dollarsthreshold:2.0pts3pts
This criterion is linked to a Learning OutcomeAssumption Change - Calculation of Operating Leverage (3 points)Objectives Compute the degree of operating leverage at a particular level of salesthreshold:2.0pts3pts
This criterion is linked to a Learning OutcomeAssumption Change - Contribution Margin Income Statement (6 points)Objectives Prepare a contribution margin income statement Show how changes in sales volume affect contribution margin and net operating income Show the effects on net operating income of changes in variable costs, fixed costs, and selling pricethreshold:4.0pts6pts
Total Points:30
Answered 3 days AfterMar 03, 2022

Solution

Ayushi answered on Mar 07 2022
59 Votes
Sheet1
    Data Given:
            Original    Assumption Changes
    Units Sold        250    275
    Selling Price Per Unit:        $50.00    $50.00
    Variable Cost Per Unit:        $23.00    $23.46
    Fixed Cost        $5,500.00    $5,500.00
    Target Profit        $1,700.00    $1,700.00
    1. Contribution Margin:
    Selling Price Per Unit        $50.00    $50.00        CONTRIBUTION MARGIN PER UNIT = SELLING PRICE PER UNIT - VARIABLE COST PER UNIT
    Less: Variable Cost Per Unit        $23.00    $23.46        CONTRIBUTION MARGIN RATIO= (CONTRIBUTION MARGIN PER UNIT/ SELLING PRICE PER UNIT)*100
    Contribution Margin Per Unit        $27.00    $26.54
    Contribution Margin Ratio        54.00%    53.08%
    2. Break Even Point:
    Fixed Cost        $5,500.00    $5,500.00        BREAK EVEN POINT (UNITS) = FIXED COST/CONTRIBUTION MARGIN PER UNIT
    Contribution Margin Per Unit        $27.00    $26.54        BREAK EVEN POINT (DOLLARS) = FIXED...
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