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hello,
i have two question regarding to CVP Analysis from MA2;-1st Question;
A company has calculated its margin of safety as 20% on budgeted sales and budgeted sales are 5,000 units per month. What would be the budgeted fixed costs if the budgeted contribution was $25 per unit?a)$100,000
b)$125,000
c)$150,000
d)$160,000-2nd Question;
Gray Ltd wish to sell 10,000 units of its Product which has a variable cost is $20. Fixed cost is $46,000 and the required profit is $24,000. Calculate the sales price per unit.My Solution;
I tried to solved this question like this
Sales =Total Cost + ProftVariable Cost = 10,000unitsx$20 = $200,000
Sales = ($200,000+$46000)+$24000 = $270,000
Sale price per unit = $270,000/10,000units = $27 (Ans)
— — — —I need your kind help in solving both of these questions.
Regards,
Answer 1st Question:
MOS = (Budgeted Sales – Break-even Sales)/Budgeted Sales
20% = (5000 – Break-even Sales)/5000
1000 = 5000 – Break-even Sales
Break-even Sales = 4000
BREAK-EVEN means Contribution Margin equals Fixed Costs.
Budgeted Fixed Cost = Break-even Sales * Budgeted Contribution = 4000 * 25
= 100,000 Answer. (a)Answer 2nd Question:
Sales 270000 [missing figure]
(VC) (200000) [20*10000]
CM 70000 [missing figure]
(FC) (46000) [Given in question]
Profit 24000 [Given in question]
Sale price = 270000/10000 = 27 is correct.x co generates a 12 % contribution on its weekly sales of $280000.a new product z is to be introduced at a special offer price in order to stimulate interest in all the company’s products, resulting in a 5% increase in weekly sales of the company’s other products.product z will incure a vc of $2.20/per unit to make and $ 0.15/per to distribute.weekly sales of z, at $1.90/per unit,are expected to be 3000 units.the effect of the special offer will be to increase the company’s weekly profit by;
a) $330
b) $780
c) $12650
d) $19700
i got answer c.is this answer true?
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