Share
Explore BrainMass

C-V-P analysis

Iron Decor manufactures decorative iron railings. In preparing for the next years operations, management has developed the following estimates:

Total Per Unit

Sales (20,000 units)................................1,000,000 50.00
Direct Materials.........................................200,000 10.00
Direct Labor(variable).................................50,000 2.50

Factory Overhead:
Variable.............................................70,000 3.50
Fixed................................................80,000 4.00

Selling and administrative:
Variable.............................................100,000 5.00
Fixed.................................................30,000 1.50

A. Compute the Unit Contribution Margin
B. Compute Contribution Margin Ratio
C. Compute Break-Even in sales dollars
D. If the sales volume increases by 20% with no change in total fixed expenses, what will be the change in net operating income?
E. If the per unit variable production cost increase by 15%, and if the fixed selling and administrative expenses increase by 12%, what will be the new break-even point in sales dollars?

Attachments

Solution Summary

Word file contains computation of the Unit Contribution Margin, Contribution Margin Ratio and Break-Even in sales dollars

$2.19