# 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

#### 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.