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CVP ANALYSIS If the variable cost % is .60 , find the contribution margin % Fixed...

CVP ANALYSIS

  1. If the variable cost % is .60 , find the contribution margin %

  2. Fixed costs= 400 , contribution margin % is .40. Find sales dollars needed to break even.

  3. Fixed costs= 500 , contribution margin per unit =10. Find sales in units to earn a net income of 100.

  4. Selling price per unit= 80 ; variable costs per unit= 60; fixed costs= 200.

     Find the contrib. margin %.

  1. Actual sales=600 ; break even sales =400 ; contribution margin= 100. Find the margin of safety in dollars.

  2. If Net Present Value is zero, do we accept or reject a project?

  3. Present value = 60 ; cost= 58. Find the net present value

  4. A graph which does NOT start at the origin slopes upward to the right. Does this represent variable costs, mixed costs or fixed costs?

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Homework Answers

Answer #1

Answer to Question 1:

Contribution Margin Ratio = 100% - Variable Cost Ratio
Contribution Margin Ratio = 100% - 60%
Contribution Margin Ratio = 40%

Answer to Question 2:

Breakeven Sales in dollars = Fixed Costs / Contribution Margin Ratio
Breakeven Sales in dollars = $400 / 0.40
Breakeven Sales in dollars = $1,000

Answer to Question 3:

Required Sales in units = (Fixed Costs + Target Profit) / Contribution Margin per unit
Required Sales in units = ($500 + $100) / $10
Required Sales in units = $600 / $10
Required Sales in units = 60

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