Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 6, Problem 5.2GAP
To determine
Concept introduction:
Cost Volume Profit (CVP) Analysis:
The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.
Contribution margin means the margin that is left with the company after recovering variable cost out of revenue earned by selling smart phones. The formula for contribution margin is as follows:
Contribution margin = Sales - Variable cost.
Similarly contribution margin ratio = Contribution/sales
Breakeven Point:
The Breakeven point is the level of sales at which the net profit is nil. It can be explained as a situation where the business is generating a sale that is equal to the expenses incurred and hence no
To calculate:
The breakeven point in units and Sales
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Students have asked these similar questions
Lindstrom Company produces two fountain pen models. Information about its products follows:
Product A
Product B
Sales revenue
Less: Variable costs
Contribution margin
Total units sold
Lindstrom's fixed costs total $86,500.
Required:
$ 76,600
41,400
$ 46,000
5,000
$ 123,400
52,800
$ 91,000
5,000
1. Determine Lindstrom's weighted-average unit contribution margin and weighted-average contribution margin ratio.
2. Calculate Lindstrom's break-even point in units and in sales revenue.
3. Calculate the number of units that Lindstrom must sell to earn a $150,000 profit.
4. Calculate Lindstrom's margin of safety (in units and sales dollars) and margin of safety as a percentage of sales based on the sales
data provided in the table above.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Required 4
Calculate the number of units that Lindstrom must sell to earn a $150,000 profit.
Note: Do not round your intermediate calculations. Round your answer…
A company reports the following information for the single product it manufactures.
Sales price
Variable cost per unit
Total fixed costs
Target income
(a) Compute contribution margin per unit.
$ 230 per unit
$ 161 per unit
$ 986,700 per year
$572,700 per year
Contribution margin
(b) Compute the break-even point in units.
Numerator
(c) Compute the unit sales to earn the target income.
Numerator
Denominator
=
Break-Even Units
=
=
Break-even units
Denominator
=
Units to Achieve Target
=
Units to achieve target
Ivanhoe, Inc. developed the following information for its product:
Sales price
Variable cost
Contribution margin
Total fixed costs
Per Unit
(a)
$102.00
71.40
$30.60
$1,288,260
Answer the following independent questions.
Number of units to be sold
How many units must be sold to break even?
Chapter 6 Solutions
Managerial Accounting
Ch. 6 - Identify and briefly describe the assumptions of...Ch. 6 - Why should managers create a CVT graph?Ch. 6 - When considering a CVP graph, how is the...Ch. 6 - Your supervisor has requested that you prepare a...Ch. 6 - Why is it important for a company to know its...Ch. 6 - Explain the difference between unit contribution...Ch. 6 - A Company’s Cost structure can have a high...Ch. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Bert Company and Ernie Company are competitors in...
Ch. 6 - Prob. 11QCh. 6 - Explain margin of safety. Why is important for...Ch. 6 - Give an example of a company to which margin of...Ch. 6 - Explain how a decision to automate a manufacturing...Ch. 6 - Explain degree of operating leverage and how it...Ch. 6 - Prob. 16QCh. 6 - Why is sales mix important to multiproduct CVP...Ch. 6 - Prob. 18QCh. 6 - Prob. 19QCh. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - Prob. 22QCh. 6 - Which of the following is not an assumption of CVP...Ch. 6 - Prob. 2MCCh. 6 - Prob. 3MCCh. 6 - Prob. 4MCCh. 6 - Prob. 5MCCh. 6 - Prob. 6MCCh. 6 - Prob. 7MCCh. 6 - Prob. 8MCCh. 6 - Prob. 9MCCh. 6 - Prob. 10MCCh. 6 - Prob. 1MECh. 6 - Prob. 2MECh. 6 - Prob. 3MECh. 6 - Prob. 4MECh. 6 - Prob. 5MECh. 6 - Calculating Break-Even Point After Cost Structure...Ch. 6 - Prob. 7MECh. 6 - Prob. 8MECh. 6 - Prob. 9MECh. 6 - Prob. 10MECh. 6 - Prob. 11MECh. 6 - Prob. 12MECh. 6 - Prob. 13MECh. 6 - Prob. 14MECh. 6 - Prob. 15MECh. 6 - Analyzing Multiproduct CVP Refer to the...Ch. 6 - Prob. 17MECh. 6 - Prob. 18MECh. 6 - Prob. 19MECh. 6 - Prob. 2ECh. 6 - Determining Break-Even Point, target Profit....Ch. 6 - Analyzing Changes in Price, Cost Structure, Degree...Ch. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Matching Terms to Definitions Match the...Ch. 6 - Analyzing Break-Even Point, Preparing CVP Graph,...Ch. 6 - Calculating Contribution Margin, Contribution...Ch. 6 - Prob. 10ECh. 6 - Calculating Target Profit, Margin of Safety,...Ch. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Analyzing Multiproduct CVP Biscayne’s Rent-A-Ride...Ch. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Prob. 22ECh. 6 - Prob. 1.1GAPCh. 6 - Prob. 1.2GAPCh. 6 - Prob. 1.3GAPCh. 6 - Prob. 1.4GAPCh. 6 - Prob. 2.1GAPCh. 6 - Prob. 2.2GAPCh. 6 - Prob. 2.3GAPCh. 6 - Prob. 2.4GAPCh. 6 - Prob. 3.1GAPCh. 6 - Prob. 3.2GAPCh. 6 - Prob. 3.3GAPCh. 6 - Prob. 3.4GAPCh. 6 - Prob. 3.5GAPCh. 6 - Calculating Contribution Margin, Contribution...Ch. 6 - Prob. 4.1GAPCh. 6 - Analyzing Break-Even Point, Target Profit, Degree...Ch. 6 - Prob. 4.3GAPCh. 6 - Prob. 4.4GAPCh. 6 - Prob. 4.5GAPCh. 6 - Prob. 4.6GAPCh. 6 - Prob. 4.7GAPCh. 6 - Prob. 4.8GAPCh. 6 - Analyzing Multiproduct CVP, Break-Even Point,...Ch. 6 - Prob. 5.2GAPCh. 6 - Prob. 5.3GAPCh. 6 - Prob. 5.4GAPCh. 6 - Prob. 6.1GAPCh. 6 - Prob. 6.2GAPCh. 6 - Prob. 6.3GAPCh. 6 - Prob. 6.4GAPCh. 6 - Prob. 6.5GAPCh. 6 - Prob. 6.6GAPCh. 6 - Prob. 7.1GAPCh. 6 - Prob. 7.2GAPCh. 6 - Prob. 7.3GAPCh. 6 - Prob. 1.1GBPCh. 6 - Prob. 1.2GBPCh. 6 - Prob. 1.3GBPCh. 6 - Prob. 1.4GBPCh. 6 - Prob. 2.1GBPCh. 6 - Prob. 2.2GBPCh. 6 - Prob. 2.3GBPCh. 6 - Prob. 2.4GBPCh. 6 - Prob. 3.1GBPCh. 6 - Prob. 3.2GBPCh. 6 - Prob. 3.3GBPCh. 6 - Prob. 3.4GBPCh. 6 - Prob. 3.5GBPCh. 6 - Prob. 3.6GBPCh. 6 - Prob. 4.1GBPCh. 6 - Prob. 4.2GBPCh. 6 - Prob. 4.3GBPCh. 6 - Prob. 4.4GBPCh. 6 - Prob. 4.5GBPCh. 6 - Prob. 4.6GBPCh. 6 - Prob. 4.7GBPCh. 6 - Prob. 4.8GBPCh. 6 - Prob. 5.1GBPCh. 6 - Prob. 5.2GBPCh. 6 - Prob. 5.3GBPCh. 6 - Prob. 5.4GBPCh. 6 - Prob. 6.1GBPCh. 6 - Prob. 6.2GBPCh. 6 - Prob. 6.3GBPCh. 6 - Prob. 6.4GBPCh. 6 - Prob. 6.5GBPCh. 6 - Prob. 6.6GBPCh. 6 - Prob. 7.1GBPCh. 6 - Prob. 7.2GBPCh. 6 - Prob. 7.3GBP
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