Cost Volume Profit (CVP) Analysis: The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit. Contribution margin means the margin that is left with the company after recovering variable cost out of revenue earned by selling smart phones. The formula for contribution margin is as follows: Contribution margin = Sales - Variable cost. Similarly contribution margin ratio = Contribution/sales Breakeven Point: The Breakeven point is the level of sales at which the net profit is nil. It can be explained as a situation where the business is generating a sale that is equal to the expenses incurred and hence no profits no loss. Breakeven point in $ is calculated with the help of following formula: Breakeven point ( units ) = Total Fixed Costs (Sales Price Per unit -Variable Cost per unit) To calculate: The number of units sold

Question

Want to see the full answer?

Answer 1

Question

Chapter 6, Problem 7MC

To determine

Concept introduction:

Cost Volume Profit (CVP) Analysis:

The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.

Contribution margin means the margin that is left with the company after recovering variable cost out of revenue earned by selling smart phones. The formula for contribution margin is as follows:

Contribution margin = Sales - Variable cost.

Similarly contribution margin ratio = Contribution/sales

Breakeven Point:

The Breakeven point is the level of sales at which the net profit is nil. It can be explained as a situation where the business is generating a sale that is equal to the expenses incurred and hence no profits no loss. Breakeven point in $ is calculated with the help of following formula:

Breakeven point (units) = Total Fixed Costs(Sales Price Per unit -Variable Cost per unit)

To calculate:

The number of units sold

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Stay-4-Ever is a small motel chain with locations in the northeastern United States. The chain has a total of 200 rooms. The following operating data are available for July: Number of Guests. Nights per Visit Guest Nights 1,600 1 1,600 750 2 1,500 275 3 825 80 4 320 19 5 95 Determine the guest nights for July. Determine the available room nights for July. Determine the occupancy rate for July. Assume that the occupancy rate for July of the prior year was 75%. Has the utilization rate for Stay-4-Ever improved or declined?

(a2) Dorothy's Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Dorothy's purchases of Xpert snowboards during September is shown below. During the same month, 120 Xpert snowboards were sold. Date Explanation Units Unit Cost Total Cost Sept. 1 Inventory 25 $66 $1,650 Sept. 12 Purchases 45 70 3,150 Sept. 19 Purchases 15 72 Sept. 26 Purchases 50 772 1,080 75 3,750 Totals 135 $9.630 Additional data regarding Dorothy's sales of Xpert snowboards are provided below. Assume that Dorothy's uses a perpetual inventory system. Date Units Unit Price Total Revenue Sept. 5 Sale 10 $190 $1,900 Sept. 16 Sale 50 190 9,500 Sept. 29 Sale 60 206 12,360 Totals 120 $23,760 X Your answer is incorrect. Compute ending inventory at September 30 using FIFO, LIFO, and moving-average cost. (Round average-cost per unit to 2 decimal places, eg. 12.50 and final answer to O decimal places, e.g. 1,250.) The ending inventory FIFO 4725 LIFO 5225 MOVING AVERAGE COST…

During May, Jimmy spent $700 to buy 20 products and sold 4 of them for $60 each. Jimmy should record as an expense for May. A. $1,200 B. $240 C. $700 D. $140