How much is the breakeven volume

Reference no: EM131967309

Problem 1. (CVP relation - main version)

Use the following contribution margin statement for 2009:

                                       2009
Sales volume (#units)        100
Revenue                           $7,500
Variable costs                   $5,500
Contribution margin          $2,000
Fixed costs                      $1,200
Profit                               $800

Required:

a) How much is the price per unit, unit variable cost and unit contribution margin?

b) Write down the CVP relation: profit as a function of sales volume in units (fill in the missing numbers in an equation like: Profit = 2 *Volume - 50).

c) If sales volume increases by 20% (from 100 to 120), how much is the $ change in profits?

d) What is the sales volume required to achieve target profit of $1,400?

e) How much is the breakeven volume?

Breakeven revenue?

f) How much is the margin of safety (at current sales volume of 100 units)? (enter percentages as a fraction of 1, i.e., enter 23.47% as 0.2347)

g) Based on the margin of safety computed in (f), will you start making a loss if sales drop by 30%?

h) How much is the operating leverage (at current sales volume of 100 units)? (enter percentages as a fraction of 1, i.e., enter 23.47% as 0.2347)

If fixed costs increase, will it increase or decrease the operating risk? (enter 1=increase, 2=decrease) 2.-/5 points

Question 2.

Suppose that the price is $35, unit variable cost is $28/unit, and total fixed costs are $1,100.

Required:

a) Compute the unit contribution margin and contribution margin ratio:

unit CM=
CM ratio= (enter CMR as a fraction of 1, not as %)

b) Write down the CVP relation (version 2): profit as a function of sales revenue.

(fill in the missing numbers in an equation like Profit = 0.35 * Revenue - 50).
Profit = * Revenue -

c) Based on the CVP relation in (b), what is the breakeven revenue?

d) Based on the CVP relation in (b), what is the sales revenue required to achieve target profit of $5,000?

Reference no: EM131967309

Questions Cloud

Firm was all equity financed : If the corporate tax rate is 36%, what would it's cost of equity be if the firm was all equity financed?

Develop a valuation for facebook : Develop a valuation for Facebook. Make sure to utilize the full valuation framework from the EI textbook and models. Also, consider Zynga's contribution.

What is the amount of the annual interest tax shield : What is the amount of the annual interest tax shield if the tax rate is 33%? (Round answer to 0 decimal places, do not round intermediate calculations)

How the farmers willingness to use gmos is related : The purpose of a Research Report is to inform your audience about research that you have conducted and to discuss the results you have found.

How much is the breakeven volume : Write down the CVP relation: profit as a function of sales volume in units. How much is the breakeven volume?

What is the value of the levered firm : What is the value of the levered firm? (Round answer to 0 decimal places, do not round intermediate calculations)

Zero cumulative surplus : How much does your firm need to borrow to have a zero cumulative surplus? (Round answer to 0 decimal places, do not round intermediate calculations)

Determine the cost of ownership for a new computer : How do I determine the cost of ownership for a new computer over the next 3 years by calculating the discount rate? The cost of the computer is $1,000.

Determining the accounts payable period : Birds Unlimited has a 45-day accounts payable period. The firm has expected quarterly sales of $1293, $1862, $2481, and $3378 over the next calendar year.

User Account

All Pages