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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Using Excel for cost-volume-profit (CVP) analysis
Download an Excel temp/ate for this problem online in MyAccountingLab or at
http://www.pearsonhigheredcom/Horngren.
The Oceanside Garden Nursery buys flowering plants in tour-inch pots for $1.00 each and sells them for $2.50 each. Management budgets monthly fixed costs of $2,100 for sales volumes between 0 and 5,000 plants. Requirements
- Use the contribution margin approach to compute the company’s monthly breakeven point in units.
- Use the contribution margin ratio approach to compute the breakeven point in sales dollars.
- Use the contribution margin approach to compute the monthly sales level (in units) required to earn a target operating income of $5,000.
- Prepare a graph of the company’s CVP relationships. Include the sales revenue line, the fixed cost line, and the total cost line. Create a chart title and label the axes.
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