Question

Cascade Builders Inc, produces three products: A, B, and C. The following information is presented for the three products: Teed Cost Product Units produced Product A HD S 200 200 Product 120 S 400 s 150 $ 700 Variable Cost Per Unit 90 400 calculate the contribution margin for each product calculate the break even point in units of the three products A, B, and combination based on Please gestions to the decision makers about how to increase profit based on the CVP

Answer 1

1. Contribution Margin= Sales-Variable cost
	A	B	C
Units	80	120	200
Price	200	400	700
VC	90	150	400
Contibution margin	110	250	300
total margin	8800	30000	60000
2. Break even point= Fixed cost/ Contribution per unit
	A	B	C
Units	80	120	200
Ratio	1	1.5	2.5
Contibution margin	110	250	300
Ratio for contribution	22	75	150
BEP= 121500/(22+75+150)= 492 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 (Breakeven analysis)