1102AFE ACCOUNTING FOR DECISION MAKING - Homework

1102AFE ACCOUNTING FOR DECISION MAKING
Trimester 3, 2019
Assessable Homework 7 – Question
TOTAL MARKS = 24 marks—divide by 8 to get a % out of 3%
Question 1 – CVP Analysis (12 marks)
Brandon Manufacturing provides the data below relating to its single product for
2020:
 Selling price per unit $20
 Annual fixed manufacturing costs $250,000
 Annual fixed non-manufacturing costs $30,800
 Variable manufacturing costs per unit $12
 Variable selling costs per unit $2
 Annual sales volume expected in 2020: 52,000 units
Required:
Complete the following table calculating each requirement listed in the table.
Requirements:
1. Contribution margin per unit =(20-12-2) =6.00
2. Contribution margin ratio =6/20
=30.00%
3. Breakeven point in units =(250,000+30,800)/6
= 46,800
4. Breakeven point in sales dollars =46,800 x 20
= 936,000
5. Firm’s profit if 46,800 units are sold = (46800*6)-(250,000+30,800)
=0
6. Firm’s profit if 52,000 units are sold == (52,000*6)-(250,000+30,800)
= 31,200.00
7. Break even point if variable manufacturing
costs decreases by $2 per unit
=(250,000+30,800)/(6+2)
= 35,100.00
8. Break even point if variable manufacturing
costs increases by $2 (from original cost and
=(250,000+30,800-100,000)/(6-2)
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