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Cost Volume Profit Analysis for Steve Stiff and Company

Steve Stiff & Company management provides the following data for the year 2005 planning:

Sales (1,500 units).............$ 25.00 per unit

Variable Cost ...................10.00 per unit

Fixed Costs ....................$ 15,000

Tax Rate ........................40%

Desired Profit .................$60,000

Determine the following:

a. Unit Contribution Margin
b. Contribution Margin Ratio
c. Breakeven Sales in Units
d. Breakeven Sales in Revenue
e. Breakeven Sales in Units with the Desired Profit
f. Breakeven Sales in Revenue with the Desired Profit
g. Breakeven Sales in Units with the Desired Profit after Taxes
h. Breakeven Sales in Revenue with the Desired Profit after Taxes

Solution Preview

a. Unit Contribution Margin = Unit Price-Variable Cost= 25-10= $15
<br>
<br>b. Contribution Margin Ratio = Contribution Margin/ Sales=15/25= 0.6
<br>
<br>c. Breakeven Sales in Units = Fixed Costs/ Contribution Margin = 15,000/15= 1000
<br>
<br>d. Breakeven Sales in Revenue = Breakeven Sales in ...

Solution Summary

Cost-Volume-Profit Analysis is determined.

$2.19