# The Little Jewelry Box Company_CVP Analysis

**accountguru**

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The Little Jewelry Box Company makes and sells jewelry boxes | |

to various retailers. Please note the following information. | |

Projected Sales (Units per Month) | 14,000 |

Average Sale Price per Unit | $ 70 |

Average Variable Cost per Unit | $ 50 |

Fixed Operating Costs per Month: | |

Administrative salaries and wages | $ 80,000 |

Marketing/Advertising costs | $ 40,000 |

Using the above information, determine the following: | |

a. Compute the total of Fixed Costs. | |

b. Compute the contribution margin per unit. | |

c. Compute the contribution margin percentage (CMR). | |

d. Prepare a budgeted CM Income Statement for the first | |

month of the year based upon projected unit sales. | |

e. Compute the Break Even number of units. | |

f. Compute the Break Even sales (in dollars) (also compute | |

using CMR). | |

g. If Targeted Operating Income were $80,000, how many units | |

would need to be sold. | |

h. Prepare a CM Income Statement if projected unit sales were | |

10% greater than the current budget. | |

i. If the current sales price of the jewelry box needs to be | |

decreased by 5% to increase sales, calculate the CM, OI, and | |

the number of BE units that need to be sold. | |

(Use the same number of units found in question "h") | |

j. If advertising costs must be increased by $5,000 to effect | |

the 10% increase in unit sales, determine the revised BE units | |

and BE sales in dollars. | |

(Use the same number of units found in question "h") | |

k. Prior to decreasing the sales price and increasing ad costs, | |

the company noted VC would increase by 5%. Using the | |

original sales price and FC, calculate the new CM, CMR, | |

revised OI, BE units, and BE sales. |

- 6 years ago

**The Little Jewelry Box Company_CVP Analysis**

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