CVP Analysis

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CVP Analysis

3) GG Sdn Bhd is planning to produce and sell 100,000 units of Chip A at RM8 per unit and 200,000 units of Chip B at RM6 per unit. Variable costs are 30% of sales for Chip A and 25% of sales for Chip B. Required : If total planned operating profit is RM270,000, what must the total fixed cost be?

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Answer 1

Answer #1

chip A	Chip B	Total
sales (100,0008) (200,000$6)	$800,000	1,200,000	2,000,000
less:variable costs (800,00030%) (1,200,00025%)	(240,000)	(300,000)	(540,000)
contribution	560,000	900,000	1,460,000
less; fixed cost (1,460,000 total contribution - 270,000 planned operating profit)			(1,190,000)
operating profit			270,000

With the given contribution margins and sales mix, the fixed cost shall be $1,190,000 to achieve a profit of $270,000.

answered by: yarf

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