CVP Analysis, *What IT?" AnalysisKevin Co. projected contribution-format income statement for the upcoming month is shownBelow Sales (500 units) $10000Variable expenses. 4000Contributions margin. 6000Fixed expenses. 1000Net operating income. 5000Required:a.) Compute the breakeven point in units.b) Compute the breakeven paint in dollars.c.) If the company wishes to earn a monthly target profit of $10,000, how many units must be sold each month?d.) Compute the company's margin of safety. State your answer in both dollar and percentage terms,e.) The company's manager thinks that adding a salaried sales staff member at a cost of 52,000 per month will increase sales by $4,000 per month. If he is correct, what will be the net dollar advantage or disadvantage of making this change?t.) Refer to the original data, the company's manager believes that a new production process will improve profitability. He plans to add new machinery that will cut variable expenses in half. This will increase fixed expenses by $3,000. He expects after this change the company's unit sales will increase by 25%. If he is correct, what will be the net dollar advantage or disadvantage of making this change?g.) Refer to the original data, the company expects to decrease variable expenses by 5% and wishes to pass the savings along to customers. The manager wishes to maintain the exact. same contribution margin ratio as the original data. What sales price will need to be charged to maintain the same contribution margin ratio?
CVP Analysis, *What IT?" Analysis
Kevin Co.
Below
Sales (500 units) $10000
Variable expenses. 4000
Contributions margin. 6000
Fixed expenses. 1000
Net operating income. 5000
Required:
a.) Compute the breakeven point in units.
b) Compute the breakeven paint in dollars.
c.) If the company wishes to earn a monthly target profit of $10,000, how many units must be sold each month?
d.) Compute the company's margin of safety. State your answer in both dollar and percentage terms,
e.) The company's manager thinks that adding a salaried sales staff member at a cost of 52,000 per month will increase sales by $4,000 per month. If he is correct, what will be the net dollar advantage or disadvantage of making this change?
t.) Refer to the original data, the company's manager believes that a new production process will improve profitability. He plans to add new machinery that will cut variable expenses in half. This will increase fixed expenses by $3,000. He expects after this change the company's unit sales will increase by 25%. If he is correct, what will be the net dollar advantage or disadvantage of making this change?
g.) Refer to the original data, the company expects to decrease variable expenses by 5% and wishes to pass the savings along to customers. The manager wishes to maintain the exact. same contribution margin ratio as the original data. What sales price will need to be charged to maintain the same contribution margin ratio?
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