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# CVP Analysis

1. C-V-P Analysis
The Last Outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the
shop, sells hand-woven blankets for an average price of \$30 per blanket. Kerry buys the blankets
from weavers at an average cost of \$21. In addition, he has selling expenses of \$3 per blanket.
Kerry rents the building for \$300 per month and pays one employee a fixed salary of \$500
per month.
1. Determine the number of blankets Kerry must sell to break even.
2. Determine the number of blankets Kerry must sell to generate a profit of \$1,000 per month.
3. Assume that Kerry can produce and sell his own blankets at a total variable cost of \$16 per
blanket, but that he would need to hire one additional employee at a monthly salary of \$600.
a. Determine the number of blankets Kerry must sell to break even.
b. Determine the number of blankets Kerry must sell to generate a profit of \$1,000 per
month.

#### Solution Summary

This shows how to determine how much must be sold to break even and make a profit in given situations.

\$2.19