Explore BrainMass
Share

Explore BrainMass

    CVP graph

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    E5-4 Ewing Company estimates that variable costs will be 50% of sales, and fixed costs will total $800,000. The selling price of the product is $4.

    Instructions
    a. Prepare a CVP graph, assuming maximum sales of $3,200,000. (Note: Use
    $400,000 increments for sales and costs and 100,000 increments for units.)
    b. Compute the break-even point in (1) units and (2) dollars.
    c. Compute the margin of safety in (1) dollars and (2) as a ratio, assuming actual
    sales are $2 million.
    Hint:
    Prepare a CVP graph and compute break‐even point and margin of safety.
    ( Study Objective 6 Study Objective 7).

    © BrainMass Inc. brainmass.com April 3, 2020, 2:38 pm ad1c9bdddf
    https://brainmass.com/business/accounting/accounting-decision-making-cvp-graph-41949

    Attachments

    Solution Preview

    Response is attached.

    E5-4 Ewing Company estimates that variable costs will be 50% of sales, and fixed costs will total $800,000. ...

    Solution Summary

    The solution explains CVP graph in detail

    $2.19

    ADVERTISEMENT