Acc 561 Instructor Assignment # 1 Cvp Analysis

255 WordsAug 12, 20152 Pages
Instructor Assignment # 1 CVP Analysis 1. Alex Miller, Inc., sells car batteries to service stations for an average of $30 each. The variable cost of each battery is $20 and monthly fixed manufacturing costs total $10,000. Other monthly fixed costs of the company total $8,000. Required: Rafael a. What is the breakeven point in batteries? b. What is the margin of safety, assuming sales total $60,000? c. What is the breakeven level in batteries, assuming variable costs increase by 20%? d. What is the breakeven level in batteries, assuming the selling price goes up by 10%, fixed manufacturing costs decline by 10%, and other fixed costs decline by $100? 2. Royer Corporation gathered the following information: Variable costs $945,000 Income tax rate 40% Contribution-margin ratio 30% Required: a. Compute total fixed costs assuming a breakeven volume in dollars of $1,350,000. b. Compute sales volume in dollars to produce an after-tax net income of $108,000. Answer: a. $1,350,000 x 0.30 = $405,000 b. $108,000/0.60 = $180,000 ($180,000 + $405,000) / 0.3 = $1,950,000 3. Furniture, Inc., sells lamps for $30. The unit variable cost per lamp is $22. Fixed costs total $9,600. Required: a. What is the contribution margin per lamp? b. What is the breakeven point in lamps? c. How many lamps must be sold to earn a pretax income of $8,000? d. What is the margin of safety, assuming 1,500 lamps are

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