Question

considering a change to its cost structure. Below is the data relating to the current structure the Current Structure Proposed Structure Unit Sales 20.000 Unt Sales Sales PricePerUnit $ 100 Sales PricePerUnk Total Variable costs 20,000 $ 400.000 Total Variable costs Total Fed Costs $ 300,000 Total Red Cous L) Prepare a CVP Statement for each cost structure. Incorporate cell references and formulas where indicated. You can instantly create the Statement for the Proposed Structure, by copying and pasting your completed CVP State wherren Structure. Make sure all highlighted a are completed. Try to avoid the headings when copying. You want to keep the Proposed Structure heading CVP Statement. Current Structure CVP Statement Proposed Structure Total Per Unit of Sales Type a Label Here formule cell reference formula Type a Label Mere cell reference formula formula Type a Label Here Type a Label Mare cel reference Type a Label Here 2) Use the Contribution Margin technique to calculate the releven point in unit and doors from one section to the next. Be careful with the headings Breakeven Units - Current Structure were you can save by copying Breakeven Units - Proposed Structure cell reference formula formula cell reference cell reference Breakeven Sales Dollars Current Structure Breakeven Sales Dollars-Proposed Structure formula formula 3.) Compare the Net Operating income and Breakeven calculations for both scenarios. What happened to the breakeven point and why? Type response here 4 Compute the Degree of Operating Leverage for both scenarios. Sovetim Degree of Operating Leverage. Current Structure cell reference cell reference formula 5. Use the Degree of Operating Leverage to determine how a 10% increase in sales will impact Net Income Degree of Operating Leverage LABEL Net Income Impact Old Net Income LABEL Current cell reference cellreference formula cell reference formula Proposal cell reference reference formula cell reference focale New Net Income 6.) Save and print (face-to-face class) 7.) Copy ROWS 1-17 of this spreadsheet tab ORIGINAL") to the Revisions" tab. Use the "Revision predsheet to prove your calculation from instructions of the Originalspreadsheet by increasing the sales volume in the date section (gray shaded are by 10. Remember to change anything else in the data section which would be affected by a change in sales volume. You should not make any changes below rowe 6) Save and print face-to-face class or upload to Blackboard online class).

Second photo is for number 8 on bottom of 1st page.

Answer 1

1.) Prepare a CVP Statement for each cost structure. Incorporate cell references and formulas where indicated. You can instantly create the CVP Statement for the Proposed Structure, by copying and pasting your completed CVP Statement for the Current Structure. Make sure all highlighted areas are completed. Try to avoid the headings when copying. You want to keep the Proposed Structure heading.
CVP Statement - Current Structure					CVP Statement - Proposed Structure
	Total	Per Unit	% of Sales			Total	Per Unit	% of Sales
Sales	$2,000,000	$100	100.00%		Sales	$2,000,000	$100	100.00%
Variable cost	$400,000	$20	20.00%		Variable cost	$700,000	$35	35.00%
Contribution margin	$1,600,000	$80	80.00%		Contribution margin	$1,300,000	$65	65.00%
Fixed Costs	$900,000				Fixed Costs	$600,000
Net Operating Income	$700,000				Operating Income	$700,000
2.) Use the Contribution Margin technique to calculate the Breakeven point in units and dollars for each scenario. You can save time again by copying from one section to the next. Be careful with the headings.
Breakeven Units - Current Structure				Breakeven Units - Proposed Structure
BEP Units = Fixed cost / Contribution margin per unit
$900,000	=	11,250.00		$600,000	=	9,230.77
$80				$65
Breakeven Sales Dollars - Current Structure		Breakeven Sales Dollars - Proposed Structure
Breakeven Sales Dollars = Fixed Cost/ contribution margin %
$900,000	=	$1,125,000.00		$600,000	=	$923,076.92
80.00%				65.00%
3.) Compare the Net Operating Income and Breakeven calculations for both scenarios. What happened to the breakeven point and why?
Net Operating Income under current and Proposed Structure are same but Breakeven sales dollar or unis is current structure is greater than the proposed variable cost is lesser under current proposal than the proposed one. Breakeven point is higher under current proposal because  a decrease in the variable expenses without a corresponding increase in selling prices will cause the contribution margin to be increased.
4.) Compute the Degree of Operating Leverage for both scenarios. Save time again.
Degree of Operating Leverage - Current Structure				Degree of Operating Leverage - Proposed Structure
Degree of Operating Leverage = Contribution margin / net operating income
$1,600,000	=	2.29		$1,300,000	=	1.86
$700,000				$700,000