Question

1. Complete a CVP Income Statement using the following data:



Sales: $335,000; Total VC: $215,000; Total FC: $105,000

2. Complete a CVP Income Statement using the following data:



Sales: $450,000; Total VC: $295,000; Total FC: $195,000

3. a. The following data pertains to Product A:



SP: $85.25; VC/unit: $43.80; Total FC: $110,000

b. The following data pertains to Product B:



SP: $125; VC/unit: $82; Total FC $89000

i)

What is the CM/ Unit for Product A? Product B?

4. In the problem above, what is the BE in Sales units for Product A? Product B?

5. Jordan Company sells a product, Product 125, which has the following data:



SP: $22.50; VC/unit: $10; Total FC: $85,000

a. What is the CM/unit?

b. What is the BE in units?

c. What is the BE in dollars?

6.Goldman Company has sales of $335,000 and total VC of $185,000

a. What is Goldman Company’s CM?

b. If they sold 25,000 units, what is the CM/Unit?

c. What is the SP/Unit?

7. Aldredge Company sells Product Z for $25. VC/unit are $9.50 and FC are $54,250

a. What is the CM/unit?

b. What is the BE in units?

c. What is the CM Ratio?

d. Using the CM Ratio, what is the BE in dollars

8. Anderson, Inc. has the following data:



SP: $25.50; Units sold: 14,000; VC/Unit: $13.75; FC: $160,000

a. Prepare a CVP Income Statement

b. Prepare a CVP Income Statement showing a 20% increase in SP (with costs remaining

constant)

c. Prepare a CVP Income Statement showing a 10% increase in SP, an 8% increase in VC, and

a $20,000 decrease in FC.

d. Using the data in the bullets, what is the CM/Unit? CM Ratio?

e. Using the data in the bullets, what is the BE in Sales Units?

Accounting 2120

Chapter 18 - Assignment 2

Cost Volume Profit

9. a. Find the BE in Sales Units using the following data:



SP/Unit: $8.00; VC/Unit: $5.75; FC: $27,000

b. Once the company reaches BE, how much income will they have at:



15,000 units; 20,000 units; 35,000 units

10. Using the data in # 9 above, prepare a CVP Income Statement assuming 14,500 units are

sold.

11. Company XYZ produces product 110, which has a SP of $125, VC/Unit of $85, and FC of

$50,000.

a. What is the BE in Units (Use CM Method)?

b. What is the CM Ratio?

c. If XYZ has sales totaling $125,000, how much of it is used to cover FC and contribute to

NI?

12. Kramer Company’s FC are $165,000. Their CM/Unit is $35.00.

a. If Kramer wants a NI of $62,500, how many units must they sell?

13. Morrison Company’s information is as follows:



SP: $50; VC/Unit: $32; FC: $32,400

a. What is the CM/Unit?

b. What is the CM Ratio?

c. What is the BE in Sales Units? Sales dollars?

d. If Morrison would like a NI of $30,600, how many units must they sell?

14. Summit, Inc. expects sales of $465,000. If BE in sales dollars is $235,000:

a. What is their Margin of Safety? What does this mean?

b. What is their Margin of Safety Ratio? What does this mean?

15. Auriema Company sells Product 465, which has a SP of $65, VC/Unit of $45, and FC of

$85,000. If they expect to sell 6000 units of this product,

a. What is their Margin of Safety?

b. What is their Margin of Safety Ratio?

Answer 1

Ans. 1	CVP Income Statement
		Total
	Sales	$335,000
	Variable expenses	-$215,000
	Contribution margin	$120,000
	Fixed expenses	-$105,000
	Net operating income	$15,000
Ans. 2	CVP Income Statement
		Total
	Sales	$450,000
	Variable expenses	-$295,000
	Contribution margin	$155,000
	Fixed expenses	-$195,000
	Net operating loss	-$40,000
Ans. 3	Contribution margin (CM) per unit = Selling price per unit - Variable cost per unit
	Product A	$85.25 - $43.80	$41.45	per unit
	Product B	$125 - $82	$43.00	per unit
Ans. 4	Break even point in units   =    Total fixed cost / Contribution margin per unit
	Product A	$110,000 / $41.45	2653.80	units
	Product B	$89,000 / $43	2069.77	units