Explore BrainMass
Share

# Managerial Decision Making - CVP Analysis

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

A distributor of pre-washed shredded lettuce is opening a new plant and considering whether to use mechanized process or manual process to prepare the product. The manual process will have a fixed cost of \$43,400 per month and a variable cost of \$1.80 per 5-pound bag. The mechanized process would have a fixed cost of \$84,600 per month and a variable cost of \$1.30 per bag. The company expects to sell each bag of shredded lettuce for \$2.50.

(a)Find the break-even point for each process.

(b)What is the monthly profit or loss if the company chooses the manual process and sells 70000 bags per month?

© BrainMass Inc. brainmass.com October 17, 2018, 12:00 pm ad1c9bdddf
https://brainmass.com/statistics/normal-distribution/managerial-decision-making-cvp-analysis-561724

#### Solution Summary

Solution depicts the steps to calculate BEP and monthly profit in the given case.

\$2.19
Similar Posting

## Accounting for Decision Making: CVP Graph

E5-4 Ewing Company estimates that variable costs will be 50% of sales, and fixed costs will total \$800,000. The selling price of the product is \$4.

Instructions
a. Prepare a CVP graph, assuming maximum sales of \$3,200,000. (Note: Use
\$400,000 increments for sales and costs and 100,000 increments for units.)
b. Compute the break-even point in (1) units and (2) dollars.
c. Compute the margin of safety in (1) dollars and (2) as a ratio, assuming actual
sales are \$2 million.
Hint:
Prepare a CVP graph and compute break‐even point and margin of safety.
( Study Objective 6 Study Objective 7).

View Full Posting Details