Question

Question 1 – CVP Analysis

Brandon Manufacturing provides the data below relating to its single product for 2020:

• Selling price per unit $20
• Annual fixed costs $280,800
• Variable costs per unit $14
• Annual sales volume expected in 2020: 52,000 units

Required:

1. Complete the following table calculating each requirement listed in the table.

Contribution margin per unit
Contribution margin ratio
Breakeven point in units
Breakeven point in sales dollars
Firm’s profit if 46,800 units are sold
Firm’s profit if 52,000 units are sold
Break even point (in units) if variable costs decreased by $2 per unit
Using the original data, what is the Break even point (in units) if variable costs increased by $2 per unit (from the original cost) and fixed costs decreased by $100,000 (from the original cost)
What would be the expected profit in 2020 if fixed costs increased by $20,000?

2. Prepare a Contribution Margin Income Statement for the expected sales in 2020: (given the original data)

Answer 1

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