CVP Analysis and High low method

Problems:

Given the following cost and activity observations for Sanchez Company's utilities, use the high-low method to calculate Sanchez's variable utilities costs per machine hour.
Cost Machine Hours
May $8,300 15,000
June 10,400 20,000
July 7,200 12,000
August 9,500 18,000

$10.00
$.60
$.40
$.52

24. If fixed costs are $500,000 and the unit contribution margin is $40, what is the break-even point if fixed costs are increased by $80,000?
14,500
12,500
8,333
9,667

25. If fixed costs are $490,000, the unit selling price is $35, and the unit variable costs are $20, what is the break-even sales (units) if fixed costs are reduced by $40,000?
32,667 units
14,000 units
30,000 units
24,500 units

26. If fixed costs are $39,600, the unit selling price is $42, and the variable costs are $24, what is the break-even sales (unit) if the variable costs are decreased by $2?
1,650
990
1,980
1,350

27. Assume that Crowley Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The unit contribution margins for Products A and B are $20 and $45 respectively. Crowley has fixed costs of $350,000. The break-even point in units is _______.
14,000 units
25,278 units
8,000 units
10,769 units

Attachments

Solution Summary

There are several problems related to high low method and CVP analysis. Solutions explain steps to study the effect of change in variable costs/fixed costs on break even point.