Reference no: EM13841237
Problem 1: CVP analysis:
SND, Inc., had the following result for last year:
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Total
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Per unit
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Sales revenue
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$2,000,000
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$20.00
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Variable expenses
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1,250,000
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12.50
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|
Contribution margin1
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75,000
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$7.50
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Fixed expenses
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400,000
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Operating income
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$350,000
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Prepare a new income statement for each of the following scenarios. Consider each scenario independently.
Required:
a. Sales volume decreases by 10%.
b. The sales price increases by 5%.
c. Variable costs per unit increase by $1.50.
d. The sales price decreases to $18, and an additional 5,000 units are sold.
e. A new advertising campaign costing $75,000 increases sales volume by 15%.
f. Variable costs per unit increase by $2.00, the sales price per unit increases by $1.50, sales volume decreases by 2,500 units, and fixed expenses increase by $20,000.