The Little Jewelry Box Company_CVP Analysis
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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. |
- 9 years ago
The Little Jewelry Box Company_CVP Analysis
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