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Accounting: C-V-P analysis and Break-even.

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Proposal A Proposal B Proposal C
Selling Price $99 $129 $99
Variable Costs 55 55 49
Contribution Margin
Contribution Margin Ratio

Fixed Costs $110,000 $110,000 $110,000

Break-even in Units

Break Even in Dollars

1. What are the break-even points in units and dollars under proposal A?

2. How did the increased selling price under proposal B impact the break-even points in units and dollars compared to the break-even points calculated under proposal A?

3. Why did the change in variable cost under proposal C not impact the break-even points in units and dollars as significantly as proposal B did?

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Solution Summary

The problem deals with determining the different profits associated with production volume. It also deals with determining the break-even level with selected information.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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