rain-drop.net

Cvp & Budgting Preparing

Sales (40, 000 units)$1, 000, 1000

Variable expenses 700, 1000

Contribution margin300, 000

Set expenses 330, 000

Net gain (loss)$ (30, 000)

1 ) What was you’re able to send break-even point in sales us dollars in 08? 2 . How many further units might the company have had to sell last year in order to make net income of $30, 500? 3. If the company will be able to reduce changing costs by $2. 60 per device in 2009 and also other costs and unit profits remain the same, how a large number of units will the company have to sell in order to earn a net income of $35, 000? Solution

1 . $320, 000

———— = $1, 100, 1000

30%

Breakeven reason for units = Fixed Costs / (Sales – Changing costs) Adjustable cost per unit sama dengan 60% times $10 = $6

Breakeven point in units= 1, 920, 000 / ($10 -$6) = 1, 920, 000 / some = 480, 000 devices needed to promote to break-even Breakeven reason for dollars sama dengan Breakeven point in units x sales value = 480, 000 back button $10 = $4, 800, 000

2 . $330, 1000 + $30, 000

————————— = $1, 200, 500 Total product sales needed.

thirty percent

$1, 200, 000

————— =48, 000total units being sold

$25

forty, 000actual units sold

8, 000additional units to be sold

three or more. 2008Variable expense per product =$17. 50($700, 000 Г· 40, 1000 units)

Variable cost reduction = 2 . 50

2009Variable cost every unit$15. 00

Expected contribution margin $10,50 ($25 – $15)

$310, 000 & $35, 1000

————————— = 36, 500 units

$10,50

Keller Firm estimates that variable costs will be 60% of product sales and fixed costs will total $1, 920, 000. The selling price of the product is $10, and 600, 000 devices will be sold.

Instructions

Making use of the mathematical equation,

(a)Compute the break-even reason for units and dollars.

(b)Compute the margin of safety in us dollars and as a ratio.

(c)Compute net income.

a-

Breakeven point in units sama dengan Fixed Costs / (Sales – Variable costs) Varying cost every unit sama dengan 60% x $10 sama dengan $6

Breakeven point in units= 1, 920, 000 as well as ($10 -$6) = 1, 920, 1000 / four = 480, 000 products needed to promote to break-even Breakeven point in dollars sama dengan Breakeven reason for units back button sales cost = 480, 000 times $10 = $4, 800, 000

b-

Perimeter of Basic safety = Total sales в€’ Break even revenue

Total revenue = six hundred, 000 devices x $10 per device = $6, 000, 500; Breakeven sales from above sama dengan $4, 800, 000 Margin of protection in dollars = $6, 000, 000 – 4, 800, 1000 = $1, 200, 1000 Margin of Safety proportion = Margin of protection in us dollars / Total sales sama dengan $1, 200, 000 as well as 6, 1000, 000

=0. a couple of = 20%

(c)Net Salary

Sales$6, 500, 000

Changing Costs(3, six hundred, 000)

Set Costs(1, 920, 000)

Net Income$ 480, 000

The fixed costs for the department are $50, 500, with $1 per unit variable costs. A conventional paper doll and one set of garments sell for $3. The maximum volume is eighty, 000 devices. With the improved volume, Mister. Dibson can be considering two options to enhance profitability. One could reduce adjustable costs to $0. seventy five, and the various other would lessen fixed costs to $35, 000.

Income = (selling price × maximum units) – (variable costs × maximum units) - fixed costs

Current Profit= ($3 × 80, 000) – ($1 × 80, 000) – $50, 000

sama dengan $240, 500 – $80, 000 – $50, 500

= $110, 000

Option 1:

The money from minimizing variable costs to $0. 75

= ($3 × 80, 000) – ($0. 75 × 80, 000) – $50, 000

= $240, 500 – $60, 000 – $50, 000

= $130, 000

Choice 2:

The net income from lowering fixed costs to $35, 000

sama dengan ($3 × 80, 000) – ($1 × 85, 000) – $35, 1000

= $240, 000 – $80, 000 – $35, 000

sama dengan $125, 500

From the above calculations we can see that option 1 " lowering variable costs to $0. 75 every unit" will ensure maximum earnings of the daily news doll products

Distinguish between varying and fixed costs.

Fixed Costs: These are generally those costs which remain fixed up to certain selection of work potential no matter how very much product you produce within that capability range. Just like factory building rent. You pay the rent irrespective of that do you use that building for making the products or perhaps not. Changing Costs: These types of...

22.08.2019

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