Question

In the month of July, Adam’s oil performed 4,000 oil changes at a price of $20. During the month, fixed costs were $18,000 and variable costs were 40% of sales. Show your math work for all parts of this problem.

1a. First do a CVP income statement (show the percents, the per unit costs, and the totals):

2. Determine the contribution margin in total dollars, per unit, and as a ratio. (Take the numbers from the income statement above, but also show the formulas you can use to compute all these amounts.)

CM total $______________    CM per unit $__________    CM ratio ___________%

3. Compute the breakeven point in dollars and units.

4. Compute the margin of safety in dollars and as a ratio.

e.          How many units do they have to sell to earn a net income of $12,000?

6. What is the breakeven sales units if Adam’s charges $18 for an oil change and variable costs are 60% of sales?

Answer 1