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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