CVP Analysis
Not what you're looking for?
Galaxy Disk's projected operating income for 2008 is $200,000, based on a sales volume of 200,000 units. Galaxy sells disks for $16 each. Variable costs consist of the $10 purchase price and a $2 shipping and handling cost. Galaxy's annual fixed costs are $600,000.
1. Calculate Galaxy's breakeven point and margin of safety in units.
2. Calculate the company's operating income for 2008 if there is a 10% increase in projected unit sales.
3. For 2009, management expects that the unit purchase price of the disks will increase by 30%. Calculate the sales revenue Galaxy must generate for 2009 to maintain the current year's operating income if the selling price remains unchanged.
Purchase this Solution
Solution Summary
The solution explains the calculation of breakeven, margin of safety in units, operating income
Solution Preview
1. Breakeven units = Fixed/unit contribution margin
Fixed cost = $600,000
Unit contribution margin = selling price - variable cost = 16 - (10+2) = $4
Breakeven units = 600,000/4 = 150,000
Margin of safety = current units sold - breakeven ...
Purchase this Solution
Free BrainMass Quizzes
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.