Question

Question 2: Quebec Builders Inc. produces three products: A, B, and C. The following information is presented for the three products: Fixed Cost Product A 80 Units produced Product B 120 $ 600 $ 360 Product 200 $ 800 $ 400 Price Per Unit $ 120 Variable Cost Per Unit 60 Required: 1. Calculate the contribution margin for each product 2. Calculate the break-even point in units of the three products A, B, and C combination based on the sales mix percentage 3. Please give suggestions to the decision makers about how to increase profit based on the CVP analysis.

Fixed coat is 142,000

Answer 1

1. Contribution Margin= Sales-Variable cost
	A	B	C
Units	80	120	200
Price	120	600	800
VC	60	360	400
Contibution margin	60	240	400
total margin	4800	28800	80000
2. Break even point= Fixed cost/ Contribution per unit
	A	B	C
Units	80	120	200
Ratio	1	1.5	2.5
Contibution margin	60	240	400
Ratio for contribution	12	72	200
BEP= 142000/(12+72+200)= 500 units

Cost Volume Profit analysis helps organizations to examine their profits, costs and prices with respect to any changed that occur in sales volume. CVP is an effective tool that helps accountants to engage in decision making regarding future operations