Calculation of break even sales using cvp formulathe

Assignment Help Financial Accounting

Reference no: EM13356287

Calculation of break even sales using CVP formula.

The following are the monthly fixed expenses for Peyton Travel:

Office rent:	$3,000.00
Depreciation of office furniture	200
Utilities	110
Telephone	520
Reservation Service Fees	380
Travel Agent Salaries	1,400.00

Variable expenses include the following:

Travel Agent Commission	5.0% of sales
Advertising	6.0% of sales
Supplies and Postage	1.0% of sales
Telephone and Reservation Service usage fees	3.0% of sales

a) Use the contribution margin ratio CVP formula to compute Peyton Travel's break-even sales in dollars. If the average sales price of a ticket is $660.00; how many tickets must be sold to reach break-even?

b) Use the income statement equation [revenue - (variable expense + fixed expense) = operating income] to compute the dollar sales needed to earn a target monthly operating income of $6,290.00. How many tickets is this if the average sales price of a ticket is $660.00?

c) Assume the average sales price decreases to $440.00 per ticket. Use the contribution margin approach to compute Peyton Travel's new break-even point in tickets sold. How does this compare to your answer in part a)?

Reference no: EM13356287

Questions Cloud

Dupont performance analysis and residual income : dupont performance analysis and residual income analysis.milano corporation has three operating divisions and requires

Calculation of maximum amount of additional finance that : calculation of maximum amount of additional finance that can be borrowed.bpc anticipates reaching a sales level of 6

Calculation of average collection period over the next : calculation of average collection period over the next year.bpc anticipates reaching a sales level of 6 million in one

Multiple choice questions in managerial accounting1 cross : multiple choice questions in managerial accounting.1. cross functional decision makinga.brings together individuals

Calculation of break even sales using cvp formulathe : calculation of break even sales using cvp formula.the following are the monthly fixed expenses for peyton traveloffice

Multiple choice questions on strategic financial : multiple choice questions on strategic financial planning.1.nbspthe strategic financial plan rests which of the

Using the given information calculate the pricing : using the given information calculate the pricing decision.relevant costs special sales order-idle versus full capacity

Distribution of income or loss to partnersjane invested : distribution of income or loss to partners.jane invested 100000 and paul invested 90000 in a new partnership. they

User Account

All Pages