Exam 5: Cost-Volume-Profit Analysis

Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What is the break-even point in units per month?

Dynacan Ltd. manufactured 10,000 units of product last year and identified the following manufacturing and overhead costs. (V denotes "variable cost" and F denotes "fixed cost.") If unit variable costs and fixed costs remain unchanged, calculate the total cost to produce 9700 units this year.

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $7. The new production line would manufacture up to 19,250 units at a variable cost of $1.85 per unit. Fixed costs would be $50,000. Variable selling and administration expenses would amount to $1.15. Determine the dollar sales needed to earn operating loss of $4,000.

Use the graphical approach to CVP analysis to solve the following problem. Home Security Systems Inc. assembles and packages home security systems from brand-name components. Its basic home security system is sold to customers who prefer to install the system themselves in their own home. Each system is assembled from components costing $1400 per system and sells for $2,000. Labour costs for assembly are $100 per system. This product line's share of overhead costs is $10,000 per month. a) How many basic security systems must be sold each month to break even on this product line? b) What will be the profit or loss for a month in which 15 basic home security systems are sold?

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $80. The new production line would manufacture up to 9,000 units at a variable cost of $15 per unit. Fixed costs would be $150,000. Variable selling and administration expenses would amount to $5. Determine the break-even point as a percent of capacity.

Juniper Ltd. Manufactured 98,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost). If variable cost and fixed costs remain unchanged, calculate the total cost to produce 62,000 units.

Use the graphical approach to CVP analysis to solve the following problem. A small manufacturing operation can produce up to 250 units per week of a product that it sells for $20 per unit. The variable cost per unit is $12, and the fixed costs per week are $1200. a) How many units must the firm sell per week to break even? b) Determine the firm's weekly profit or loss if it sells: (i) 120 units per week (ii) 250 units per week c) At what level of sales will the net income be $400 per week?

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. What is the break-even point expressed in dollars of revenue?

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. What number of meals must be sold to generate a net income of $7,800?

The Kelowna division of Windstream RVs builds the Wanderer model. The division had total revenue of $4,785,000 and a profit of $520,000 on the sale of 165 units in the first half of its financial year. Sales declined to 117 units in the second half of the year, resulting in a profit of only $136,000. Determine the selling price per unit, the total revenue in the second half, the unit variable costs, and the annual fixed costs.

Mentis Ltd. Manufactured 350,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost). If variable cost and fixed costs remain unchanged, calculate the total cost to produce 385,000 units.

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. At 75% capacity, what is Cliff's net income?

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the net income on revenue of $10,000 per month.

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. What number of meals must be sold to break-even?

Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. How many hot dogs must Weiner sell in a month to break even?

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the monthly net income at a volume of 1800 lamps per month?

At this time, Weiner's Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. Weiner is considering some changes. If Weiner increases his selling price to $2.75 per hot dog, and reduce his variable cost per hot dog to $1.15, what level of fixed cost per month would reduce his break-even point in units by 50% from what it is now?

Mike Babchuck is considering the start-up of a service company. He has compiled information on costs as follows: With the cost data provided, determine the variable cost per km.

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $105. The new production line would manufacture up to 825,000 units at a variable cost of $64 per unit. Fixed costs would be $1,515,000. Variable selling and administration expenses would amount to $18. Determine the units needed to earn operating income of $4,000,000.

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $100. The new production line would manufacture up to 42,000 units at a variable cost of $67 per unit. Fixed costs would be $580,000. Variable selling and administration expenses would amount to $12. Determine operating income at 80% of capacity.