Explore BrainMass

Explore BrainMass

    Accounting:Cost-volume-profit analysis.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Assume the following:

    Sales of 5000 units per month
    Price of $12.50 per unit
    Revenue of $62,500
    Variable Cost of $6.00 per unit
    Fixed Costs of $15,000

    In all parts, show your formulas and work.

    Part A: Explain what happens with a 5% price increase to revenue, variable costs, contribution to margin, fixed costs and the wholesale price assuming sales stay constant. State your answer in $.
    Part B: What is the breakeven sales change in units and dollars with a 5% price increase? Explain the effect on profitability at, above and below the breakeven sales change.
    Part C: What is the breakeven sales change, in units, for an increase in variable costs equal to $.22 with a 5% price increase? Explain the effect on profitability at, above and below the breakeven sales change.
    Part D: What is the breakeven sales change, in units, for a fixed cost increase of $1,000 each month with a 5% price increase? Explain the effect on profitability at, above and below the breakeven sales change.

    © BrainMass Inc. brainmass.com June 4, 2020, 12:50 am ad1c9bdddf
    https://brainmass.com/business/profit-margin/accounting-cost-volume-profit-analysis-363297

    Solution Summary

    The problem set deal with issues in accounting: cost-volume-profit analysis.

    $2.19

    ADVERTISEMENT