Calculate: Cost-Volume-Profit Analysis
Not what you're looking for?
Scenario: Sure Corporation has collected the following information after its first year of sales. Net sales were $1,600,000 on 100,000 units; selling expenses $240,000 (40% variable and 60% fixed); direct materials $511,000; direct labor $285,000; administrative expenses $280,000 (20% variable and 80% fixed); manufacturing overhead $360,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.
Instructions:
A) Compute (1) the contribution margin for the current year and the projected year, and (2) the fixed costs for the current year (assume that fixed costs will remain the same in the projected year).
B) Compute the break-even point in units and sales dollars for the current year.
C) The company has a target net income of $310,000. What is the required sales in dollar's for the company to meet its target?
D) If the company meets its target net income number, by what percentage could its sales fall before it is operating at a loss? That is, what is its margin of safety ratio?
Purchase this Solution
Solution Summary
This solution computes the contribution margin, breakeven point, and margin of safety for Sure Corporation. This solution is provided in an Excel document which is attached.
Solution Preview
Please view the attached document for the solution. The attachment displays the ...
Purchase this Solution
Free BrainMass Quizzes
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce