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    3 views2 pages

    ACCT Extra Credit

    Uploaded by

    austinzahner

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    MANAGERIAL ACCOUNTING

    Cost Volume Profit Analysis


    Extra Credit Assignment
    SPRING 2023
    Due Monday April 12, 2023 (2 weeks)
    Date Assigned: Wednesday March 29, 2023

    Problem 1

    Assume that Tyson Company sells a single product with the following cost and price data:

    Total fixed costs $100


    Variable cost per unit $5.00
    Selling price per unit $10.00

    The relevant range for units sold is from zero units to 60 units.

    Instructions

    Using the above information, do the following:


    a. Write the equation for the fixed cost line (curve). Explain what it means.
    b. Write the equation for the revenue curve. Explain what it means.
    c. Write the equation for the total cost curve. Explain what it means.
    d. Write the equation for break-even units and solve.
    e. What is the break-even revenue? Show your calculations.
    f. Develop a CVP graph. Make sure your break-even on the graph matches your
    calculation. Use graph paper or Excel.
    I. In developing your graph, pick some key points. The equations developed above
    can help you in this regard.
    Problem 2

    Seprod Manufacturing makes aluminum cans. The following cost and price data apply to the
    company’s operations:

    Sales price per can is $28.00


    Variable cost is $12.00 per can
    The fixed cost is $30,000.
    The company has a desired profit of $40,000

    Instructions

    1) Write the equation for the fixed cost line (curve). Explain what it means.
    2) Write the equation for the revenue curve. Explain what it means.
    3) Write the equation for the total cost curve. Explain what it means.
    4) Write the equation for break-even units and solve.
    5) What is the break-even revenue? Show your calculations.
    6) Develop a CVP graph. Make sure your break-even on the graph matches your
    calculation.
    a. In developing your graph, pick some key points. The equations developed above
    can help you in this regard.
    7) Calculate the desired number of units necessary to achieve a desired profit of $40,000.
    8) What is the margin of safety – in other words, by how much can sales decrease before
    the company runs into financial trouble? Show calculations.
    9) The marketing manager believes that reducing the sales price to $25.00 and increasing
    fixed cost by $12,000 to $42,000 will increase profitability. Is he correct?
    a. Compute break-even units
    b. Compute break-even in sales dollars
    c. Construct a CVP graph. Use graph paper or Excel.

    Note: Unless your work is neat, it will not be accepted. No late submission will be accepted.

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