3100 LS Midterm 2

Petes Putters sells each putter for $125. The vc IS $60 per putter and FC total $400,000. Based on this information

sale of 12,000 putters results in NI of $380,000 contribution margin per putter is $65

CVP analysis focuses on how profits are affected by:

sales volume selling price unit variable cost total fixed costs mix of products sold

order in which sales dollars are applied on a contribution margin income statement

VC FE NI

Sold 300 mugs last year for $20 each. VC were $7 per mug and total FC were $1,700. Mugs profit was:

2,200 profit= 300x(20-7)-1700

run like the wind sells ceiling fans. Target profit is $470,000. If each fans contribution margin is $32 and fixed costs are $222,640, the number of fans required to meet the companys goal is:

21,645 Sales volume= (470,000+222,640)/32

Blankets target profit is $520,000. Each blanket has a contribution margin of $21. Fized costs are $320,000. The number of blankets they need to sell to achieve target profits?

40,000 520,000+320,000/21

CVP

Cost volume profit

A company sold 20,000 units of its product at a selling price of $20. The VC per unit is $11. Fixed expenses total $150,000. The company's contribution margin is:

contribution margin= 20,000x(20-11) $180,000

At break even point:

total revenue - total costs net operating income is 0

Variable Expenses/sales is the calc of the ___ ____ ratio.

variable expense