Exam 5: Cost-Volume-Profit Analysis

Ace Corporation's variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. Calculate the contribution rate.

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1,500 units per month, and sell the product for $125 each. What would be the net income at 75% capacity?

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 is the break-even point expressed as a percent of capacity?

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. How much profit should Weiner realize on the sale of 3,000 hot dogs?

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. How many dolls must be sold each week to produce a net income of $1125?

A new product is expected to sell for $20. The company would manufacture up to 46,500 units at a variable cost of $8 per unit. Fixed costs would be $220,000. Variable selling and administration expenses would amount to $3. Determine the contribution margin per unit and contribution margin rate.

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1,000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. Calculate the break-even point as a percentage of capacity.

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1,000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. How many cameras must be sold per month to have a net income of $40,000?

M Studios estimates that it can sell 1,500 camera lenses at $150 each. Total fixed costs are $120,000, and variable costs are $30 per lens. What unit sales are required to break even? What is the revenue generated if all units are sold? Use the graphical approach to CVP analysis to solve.

Once a business is operating beyond the break-even point, why doesn't each additional dollar of revenue add a dollar to net income?

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 revenue per month?

A company makes gadgets selling for $15 each. For 20,000 gadgets, the cost is $3 each, and the estimated fixed costs are $150,000. What is the break-even volume and revenue? Use the graphical approach to CVP analysis to solve.

Use the graphical approach to CVP analysis to solve the following problem. Valley Peat Ltd. sells peat moss for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000. a) How many bags of peat must be sold to break even? b) What will be the net income for a year in which 60,000 bags of peat are sold? c) How many bags must be sold for a net income of $60,000 in a year? d) What volume of sales would produce a loss of $10,000?

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $18.50. The new production line would manufacture up to 14,500 units at a variable cost of $6.25 per unit. Fixed costs would be $34,000. Variable selling and administration expenses would amount to $3. Determine the dollar sales needed to earn operating loss of $2,500.

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1,000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. Calculate the contribution margin per camera.

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $75. The new production line would manufacture up to 150,000 units at a variable cost of $47 per unit. Fixed costs would be $975,000. Variable selling and administration expenses would amount to $15. Determine the break-even point as a percent of capacity.

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. Calculate the unit contribution margin.

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 break-even point in units per month.

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the contribution rate.

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 if Cando operates at 60% capacity?