Question

5. Slip-Shod Company manufactures and markets several products. Management is considering the future of one product, bootstraps that have not been as profitable as planned. Since this product is manufactu red and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for an $85 selling price per unit. The fixed costs for the year are expected to be $42,300, up to a capacity of 1,500 units. Forecasted variable costs are $38 per unit. a) Using four levels of production, populate the table below and use it to plot a CVP chart. Label on the CVP chart: the Total Costs line, Sales line, Break-even Point, Loss Area, and Profit Area. Costs Units Total Total Sales Fixed Variable 1,500

Answer 1

Date Slip-shod Company COST Units Fixed Total Sales Variable [$38*A] Total Lc+D7 (4 8S X ) 42300 300 1200 Isoo 25500 TO 2000 127500 42300 42300 42300 11400 45600 57000 42300 53700 87900 99 300 140730 tapos Sale top of 90000 Profit area touto 400 to Break euen Point at 900 units Loss AREA Por 300 600 900 1200 'isoo units Points A B (300, 53100) (1202,87900) (Boo, 99300) (300 25500) (1200, 102000) lisereg 127560 E

(6 Break even even units point in point in = = Total fixed cost salespriu - Variable cost A $49300 $85- $38 = 900 units Broskeven pt in Dollassa qovunita t sales para = 900x$85 - 76

Slip-hod company Bootstraps Contributeen maigis statement at Breakieljena Sales ($85x900) $7650a Less: Variable cost (138 X900) $ 34200 Contrilention margin $42300 Fixed cost $42300 profit / Loss