Share
Explore BrainMass

CVP Analysis-Break even sales

Each problem is unrelated to the others.

1. Given: Selling price per unit, $20; total fixed expenses, $5,000; variable expenses per unit, $15. Find break-even sales in units.

2. Given: Sales, $40,000; variable expenses, $30,000; fixed expenses, $7,500; net income, $2,500. Find break-even sales in dollars.

3. Given: Selling price per unit, $30; total fixed expenses, $33,000; variable expenses per unit, $14. Find total sales in units to achieve a profit of $7,000, assuming no change in selling price.

4. Given: Sales, $50,000; variable expenses, $20,000; fixed expenses, $20,000; net income, $10,000. Assume no change in selling price; find net income if activity volume increases 10%.

5. Given: Selling price per unit, $40; total fixed expenses, $80,000; variable expenses per unit, $30. Assume that variable expenses are reduced by 20% per unit, and the total fixed expenses are increased by 10%. Find the sales in units to achieve a profit of $20,000, assuming no change in selling price.

Solution Preview

Solution

1. Given: Selling price per unit, $20; total fixed expenses, $5,000; variable expenses per unit, $15. Find break-even sales in units.

Contribution margin per unit = Selling Price - Variable Cost per unit
=20-15
=$5
Break even Sales in units = Fixed Costs/contribution margin per unit
=5000/5
= 1000 units

2. Given: Sales, $40,000; variable expenses, $30,000; fixed expenses, $7,500; net income, $2,500. Find break-even sales in dollars. ...

Solution Summary

There are five problems related to CVP analysis. Solutions describes the steps to determine sales required to break even and meet the targetted profit.

$2.19