Break even cvp potential cost structure change employee

Reference no: EM13579773

Break even, CVP, potential cost structure change, employee reaction Ersatz manufactures a single product. What is Ersatz Break even point in units? Draw a CVP chart showing the 2 level of activity break even point? If Ersatz plans to sell 1300 units what will pretax income be? Management expects that variable costs and selling prices will rise by 3% but fixed costs will not change. What will the new break even point be?

Income Statement: Activity levels

Volume 1000units 1500units

Sales @100 ea $100,000 $150,000

Less the variable expenses

Manufacturing @ 40 ea $40,000 60,000

Selling @10 ea 10,000 15,000

Administration @ 6 ea 6,000 9,000

contribution margin 44,000 66,000

less fixed expenses

manufacturing 10,000 10,000

Selling 11,000 11,000

Administration 20,000 20,000

Pretax income $3000 $25,000

Reference no: EM13579773

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