Comprehensive CVP analysis:
Bison Industries manufactures 16GB flash drives. The currentsales volume is 100,000 units per month. Price and cost data for arelevant rage extending to 200,000 units per month is asfollows:
Sales price per unit | | $ 25 |
Variable costs per unit: | | |
Direct materials | | $ 8.40 |
Direct labor | | $ 8.00 |
Variable manufacturing overhead | | $ 3.70 |
Variable SG&A | | $ 1.90 |
Monthly fixed expenses: | | |
Fixed manufacturing overhead | | $ 121,800 |
Fixed SG&A | | $ 167,100 |
- Prepare a contribution margin format income statement in goodform including per unit and ratio columns.
- What is the company’s contribution margin per unit?Contribution margin ratio? Total contribution margin?
- What would the company’s monthly operating income be if it sold130,000 units?
- What would the company’s monthly operating income be if it hadsales of $4,000,000?
- What is the breakeven point in units and dollars?
- What is the current margin of safety in units anddollars?
- How many units would the company have to sell to earn a targetmonthly profit of $260,100?
- Management is currently in contract negations with the laborunion. If the negotiations fail, direct labor costs will increaseby 10% and fixed costs will increase by $23,500 per month. If thesecosts increase, how many units will the company have to sell eachmonth to breakeven?
