Victoria Company reports the following operating results for the month of April. VICTORIA COMPANY CVP Income Statement For the Month Ended April 30, 2020 Total Per Unit Sales (9,000 units) $450,000 $50 Variable costs 270,000 30.00 Contribution margin 180,000 $20.00 Fixed expenses 150,000 Net income $30,000 Management is considering the following course of action to increase net income: Reduce the selling price by 4%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%. Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round intermediate calculations to 4 decimal places e.g. 0.2522 and final answer to 0 decimal places, e.g. 2,510.) (a) Assuming no changes to selling price or costs. Break-even point ? units Break-even point $ ? Margin of safety $ ? (b1) Assuming changes to sales price and volume as described above. Break-even point units Break-even point $ ? Margin of safety
Victoria Company reports the following operating results for the month of April. VICTORIA COMPANY CVP Income Statement For the Month Ended April 30, 2020 Total Per Unit Sales (9,000 units) $450,000 $50 Variable costs 270,000 30.00 Contribution margin 180,000 $20.00 Fixed expenses 150,000 Net income $30,000 Management is considering the following course of action to increase net income: Reduce the selling price by 4%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%. Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round intermediate calculations to 4 decimal places e.g. 0.2522 and final answer to 0 decimal places, e.g. 2,510.) (a) Assuming no changes to selling price or costs. Break-even point ? units Break-even point $ ? Margin of safety $ ? (b1) Assuming changes to sales price and volume as described above. Break-even point units Break-even point $ ? Margin of safety
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 6CE
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Question
Victoria Company reports the following operating results for the month of April.
|
VICTORIA COMPANY |
||||
|
Total |
Per Unit |
|||
| Sales (9,000 units) | $450,000 | $50 | ||
| Variable costs | 270,000 | 30.00 | ||
| Contribution margin | 180,000 | $20.00 | ||
| Fixed expenses | 150,000 | |||
| Net income | $30,000 |
Management is considering the following course of action to increase net income: Reduce the selling price by 4%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%.
Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round intermediate calculations to 4 decimal places e.g. 0.2522 and final answer to 0 decimal places, e.g. 2,510.)
(a) Assuming no changes to selling price or costs.
| Break-even point |
|
? units | |
| Break-even point |
$ |
? | |
| Margin of safety |
$ |
? |
(b1) Assuming changes to sales price and volume as described above.
| Break-even point |
|
units | |
| Break-even point |
$ |
? | |
| Margin of safety |
$ ?? |
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