introduction to cvp analysis · 2019-01-01 · cost-volume-profit analysis introduction to cvp...

Cost Volume Profit Analysis

Managerial AccountingManagers must understand the cost of operating a business:

Two categories of costs:

Product Costs -Merchandising business

Inventory purchasesManufacturing business

Direct materialsDirect laborManufacturing overhead

Period costs - selling and administrative

Volume: The number of units of goods purchased or produced and how many units are sold.

Simplifying Assumption: The amount of or number of units we produce or purchase will be the same as the number we sell.

The Behavior of Costs with Changes in Volume

Variable CostsFixed Costs

Understanding how your costs behave with changes in volume allows management to understand the effect on profits given changes in volume.

CVP Analysis

Cost-Volume-Profit Analysis

Introduction to CVP Analysis

of 1

Variable Cost: A cost that varies in total with changes in volume but are fixed per unit.

Total Variable Costs

Tota

l Dire

ct M

ater

ial C

osts

Volume (# Units Sold)

$ 80,000

0 1,000 2,000 3,000 4,000

$ 60,000$ 40,000$ 20,000

$ 0

Variable Cost Per Unit


Slope = VC per UnitSlope = rise/run

Dire

ct M

ater

ial C

osts

Per

Uni

t

$20,0001,000

$201

$ 40

0 1,000 2,000 3,000 4,000

$ 30$ 20$ 10$ 0

Other Examples of Variable Costs:

Direct LaborSales Commissions

infinity

0Volume (# Units Sold)

Tota

l Dire

ct M

ater

ial C

osts

$0infinity

Relative Range: The range of volume that is reasonably anticipated for operations.

Within the relative range, the slope of the variable cost line is assumed to be linear, or in other words, the VC per unit is assumed to be constant.

Variable Costs

Slope of line = V/C per unit

400,000 600,000

RelevantRange

Variable Costs

Page 1 of 1

Real World Fixed Costs

Tota

l Ren

tal C

osts

/mon

th $30,000

$20,000

$10,000

0 400,000 600,000 infinity

Volume (# units produced/sold per month)

Within the Revelant Range, a fixed cost is assumed to be fixed throughout that range of volume.

RelevantRange

Fixed Costs

Tota

l Ren

tal C

osts

/mon

th

$ 80,000$ 60,000$ 40,000$ 20,000

$ 0


Fixed Costs Per Unit


Ren

tal c

osts

per

uni

t

$ 0

$ 2

$ 4

$ 6

$ 8

$ 1

$ 3

$ 5

$ 7

0 1,000 2,000 3,000 4,000 5,000 6,000500

0 1,000 2,000 3,000 4,000 5,000 6,000

Fixed Costs: Costs which are fixed or constant regardless of changes in volume, but vary per unit.

Fixed Costs

Page 1 of 1

$200,000

$160,000

$120,000

$80,000

$40,000

$010,0000 20,000 30,000 40,000 50,000To

tal S

uper

viso

r Sal

arie

s/ye

ar

Volume (# units sold) per year

Stepped Costs Mixed Costs:(Costs which have a fixed and variable portion)

$6,000$5,000

$4,000$3,000$2,000

$0$10,000$0 $20,000 $30,000 $40,000 $50,000

$1,000

Tota

l Ren

tal C

osts

/Mon

th

Volume in sales revenues ($) per month

Slope = VC/Unit$1,000$10,000 = $.10 = 10%

Intersection = Total Fixed Cost Portion

Example: Management believes its utility costs are mixed in their behavior with changes in volume. Given the data below for the last six months of operations, determine if utility costs are indeed mixed, and, if so, calculate the variable and fixed cost components using first the scattergraph method and then the high-low method.

MonthJan.Feb.Mar.Apr.MayJune

# Units Produced10,000 7,00015,000 8,00013,00012,000

Utility Costs$17,000$14,000$24,000$15,000$20,000$18,000

Stepped and Mixed Costs

Page 1 of 2

High-Low Method

$25,000$20,000$15,000$10,000

$5,000$0

0

Tota

lUtil

ityC

ost

Volume in Thousands (# of Units Produced)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

VC per unit = Slope =

slope = VC per unit = $1.25 per unit

Fixed CostComponent

= $1.25 per unit

(Jan. $17,000/10,000)(Feb. $14,000/7,000)

(Mar. $24,000/15,000)

(Apr. $15,000/8,000) (May $20,000/13,000)(June $18,000/12,000)

$10,0008,000

Analysis of Mixed CostsWhat portion is fixed and what portion is variable?

1. Scattergraph or Visual-Fit Method2. High-Low Method3. Least Square Method

Total Utility Costs = Variable Costs + Fixed Costs

$24,000 = ($1.40 x 15,000) + FC$24,000 = $21,000 + $3,000

$0$5,000

$10,000$15,000$20,000$25,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Scattergraph Method

Tota

l Util

ity C

ost

$3,000


Fixed Cost Component VC/Unit

(Mar. $24,000/15,000)

(Feb. $14,000/7,000)

(Apr. $15,000/8,000) (May $20,000/13,000)(June $18,000/12,000)

(Jan. $17,000/10,000)

Slope = Rise/Run = = $1.40$7,0005,000

High-Low Method

$25,000$20,000$15,000$10,000

$5,000$0

0

Tota

lUtil

ityC

ost

Volume in thousands (# of units produced)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Total Cost = Variable Cost + Fixed CostAt High Point:

$24,000 = ($1.25 15,000) + FC$24,000 = $18,750 + FC

$24,000 - $18,750 = FC $5,250 = FC

.


Fixed CostComponent = $5,250 (Jan. $17,000/10,000)

(Feb. $14,000/7,000)

(Mar. $24,000/15,000)

(Apr. $15,000/8,000) (May $20,000/13,000)(June $18,000/12,000)

High-Low Method

$25,000$20,000$15,000$10,000

$5,000$0

0

Tota

lUtil

ityC

ost

Volume in thousands (# of units produced)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Total Cost = Variable Cost + Fixed CostAt Low Point:

$14,000 = ($1.25 x 7,000) + FC$14,000 = $8,750 + FC

$14,000 - $8,750 = FC $5,250 = FC


Fixed CostComponent

(Jan. $17,000/10,000)(Feb. $14,000/7,000)

(Mar. $24,000/15,000)

(Apr. $15,000/8,000) (May $20,000/13,000)(June $18,000/12,000)

= $5,250

Stepped and Mixed Costs

Page 2 of 2

If over the last year, the two months of highest and lowest production volume were April and August, respectively, and the cost of manufacturing supplies in those two months were as follows:

Calculate the fixed cost and variable cost per unit portion of the supplies cost if it is in fact a mixed cost.

What would be the anticipated manufacturing supplies cost in a month where a volume of 20,000 units was projected?

Describe the scattergraph approach to determine the fixed and variable cost per unit components of a mixed cost and explain why it is probably preferable to the method used above.

a.

b.

c.

April

Volume/Units Manufacturing Supplies

$9,00014,000 $12,00026,000

August

$480,000$440,000$400,000$360,000$320,000$280,000$240,000$200,000$160,000$120,000

$80,000$40,000

$0

Tota

lCos

ts&

Tota

lRev

enue

sPer

Mon

th

0 1 2 3 4 5 6Volume in Thousands (# of Units Produced and Sold)

CVP or Breakeven Analysis

Breakeven Point:Sales Revenues - Variable Costs - Fixed Costs = 0

$160,000 - $40,000 - $120,000 = 0($80 x 2,000) - ($20 x 2,000) - $120,000 = 0

Sales Revenues

Total CostSlope = Variable Cost

= $20 per unit

Slope = Sales Priceper unit

=$160,0002,000

$801

= $80

($80 x 1,000) - ($20 x 1,000) - $120,000 =

$480,000$440,000$400,000$360,000$320,000$280,000$240,000$200,000$160,000$120,000

$80,000$40,000

$0

0 1 2 3 4 5 6Tota

lCos

ts&

Tota

lRev

enue

sPer

Mon

th


Calculating Profit/Loss Graphically

Calculating profit at 1,000 units of volume:Sales Revenues - Variable Costs - Fixed Costs = Net Income

$80,000 - $20,000 - $120,000 = ($60,000)?

Sales RevenuesSlope = 80/1Sales Price = $80

per unit

Total CostSlope = 20/1Variable Cost = $20

per unit

$140,000

Loss = $60,000

Which of the following are true statements?

Fixed costs per unit decrease with increases in volume.

Variable costs per unit are assumed to be fixed within the relevant range.

Direct labor costs are typically a variable cost.

Mixed costs are costs that have both a fixed and variable component.

CVP Analysis requires all costs (product and period) to be distinguished as perfectly variable or perfectly fixed within the relevant range.

a.

b.

c.

d.

e.

($80 x 4,000) - ($20 x 4,000) - $120,000 =

$480,000$440,000$400,000$360,000$320,000$280,000$240,000$200,000$160,000$120,000

$80,000$40,000

$0

0 1 2 3 4 5 6Tota

lCos

ts&

Tota

lRev

enue

sPer

Mon

th


Calculating Profit/Loss Graphically

Calculating profit at 4,000 units of volume:Sales Revenues - Variable Costs - Fixed Costs = Net Income

$320,000 - $80,000 - $120,000 = $120,000?

Sales RevenuesSlope = 80/1Sales Price = $80

per unit

Total CostSlope = 20/1Variable Cost = $20

per unit

Profit = $120,000

Which of the following are true statements?

Fixed costs per unit decrease with increases in volume.

Variable costs per unit are assumed to be fixed within the relevant range.

Direct labor costs are typically a variable cost.

Mixed costs are costs that have both a fixed and variable component.

CVP Analysis requires all costs (product and period) to be distinguished as perfectly variable or perfectly fixed within the relevant range.

a.

b.

c.

d.

e.

True

True

True

True

True

Solution: Questions Problem: Mixed Cost Analysis

Approaches to CVP Analysis

Problem: Questions

Page 1 of 3

Given the graph presented below provide responses to the following:

$200,000$180,000$160,000$140,000$120,000$100,000

$80,000$60,000$40,000$20,000

$0

0 1 2 3 4 5 6Volume in Thousands (# Units Sold)

Tota

l Sal

es R

even

ues &

Tot

al C

osts

7 8

AB

Calculate the variable cost per unit.Determine the breakeven point in sales dollars and number of units.Determine the total variable costs at a volume of 5,000 units.Determine the net income (loss) at a volume of 2,000 units.

e.f.g.h.

What does line A represent?Line A represents total sales revenues.

Calculate the sales price per unit.Sales price per unit equals the slope of line A.

What does line B represent?Line B represents total costs.

Determine the amount of total fixed costs.Fixed costs equal $80,000, the point of intersection of the total cost line with the vertical axis.

$80,0002,000

$401= = $40

a.

b.

c.

d.

Calculate the fixed cost and variable cost per unit portion of the supplies cost if it is in fact a mixed cost.

a.

Mixed Cost Calculations for Manufacturing SuppliesVariable Cost Per Unit = Slope of Line

Total Costs = Variable Costs + Fixed Costs

RiseRun

$3,00012,000= = $ .25 per unit

At High Point in Volume:$12,000 = ($.25 x 26,000) + FC$12,000 = $6,500 + FC $5,500 = FC

At Low Point in Volume: $9,000 = ($.25 x 14,000) + FC $9,000 = $3,500 + FC $5,500 = FC

TC = VC + FC

TC = ($.25 x 20,000) + $5,500

$10,500 = $5,000 + $5,500

What would be the anticipated manufacturing supplies cost in a month where a volume of 20,000 units was projected?

b.

The scattergraph method identifies each monthly amount of production volume and related cost on a graph. A line is drawn to best fit the resulting relationship between cost and volume. The slope of this line is then calculated and represents the variable cost per unit. The intersection of the line with the vertical (cost) axis of the graph is the fixed cost portion.

The scattergraph may prove a better approximation of the amount of fixed and variable cost per unit components of a mixed cost because more than just two months of data is considered in the approach.

c.

Given the graph presented below provide responses to the following:

$200,000$180,000$160,000$140,000$120,000$100,000

$80,000$60,000$40,000$20,000

$0

0 1 2 3 4 5 6Volume in Thousands (# Units Sold)

Tota

l Sal

es R

even

ues &

Tot

al C

osts

7 8

AB

What does line A represent?Calculate the sales price per unit.What does line B represent?Determine the amount of total fixed costs.

a.b.c.d.

Solution: Breakeven Graph Problem: Breakeven Graph

Problem: Breakeven Graph

Approaches to CVP Analysis

Page 2 of 3

Solution: Mixed Cost Analysis Solution: Mixed Cost Analysis

Solution: Mixed Cost Analysis

Calculate the variable cost per unit.Variable cost per unit equals the slope of line B.

Determine the breakeven point in sales dollars and number of units.3,000 units or $120,000 of sales revenues.

Determine the total variable costs at a volume of 5,000 units.VC per unit = $13.33$13.33 x 5,000 units = $66,667

Determine the net income (loss) at a volume of 2,000 units.

$120,000 - $80,0003,000 - 0

$40,0003,000= = $13.33

e.

f.

g.

h.

SR - VC - FC = NI($40 x 2,000) - ($13.33 x 2,000) - $80,000 = NI

$80,000 - $26,667 - $80,000 = ($26,667)

Approaches to CVP AnalysisSolution: Breakeven Graph

Page 3 of 3

Example: Calculate the amount of sales revenues at breakeven given the following information for last year:

Sales Revenues Net Income CM Ratio

SR - FC - VCCM - FC

CF)RS oitaR MC(FC.25X

$350,000$50,000

--

25%

= NI= NI= $0= $0

.

First, calculate FC at a different level of volume:

(.25 $350,000)FC = NI CM

FC FC = $50,000

= $50,000 $87,500$87,500 $50,000 = FC

= FC$37,500

----

.

GAAP Income Statement Format

Contribution Margin Format Income Statement

Sales RevenuesLess: Total Variable Costs Contribution MarginLess: Total Fixed Costs Operating Income

Sales RevenuesLess: Cost of Goods Sold Gross MarginLess: Selling & Administrative Expenses Operating Income

$1,000,000 600,000 400,000

350,000$ 50,000

$1,000,000700,000300,000250,000

$ 50,000

CVP analysis can be used with historical information or prospective budgeted information to respond to the following kinds of questions:

CVP Analysis

How many units did we need to sell last year or do we need to sell next year in order to simply breakeven?

How many units did we need to sell last year or do we need to sell next year to generate a certain target net income?

What effect would changes in sales price, costs, or volume have on net income?

.

.

.

An Equational Approach to CVP Analysis

Basic Equation:-

$100,000

= NI

$ 000,06 $25,000 = $15,000

$25,000 = $15,000

FC

FC NI=$25,000 = $15,000

($10 10,000).

SR

.(SP/Unit # Units)

VC

($6 10,000).(VC/Unit # Units).

---

(VC Ratio SR).(60% $100,000).

--

--

-

(40% $100,000).

CM$40,000

(CM/Unit # Units).($4 10,000).

(CM Ratio SR).CM as % SR or

Example: Given the following information, determine the sales price per unit required at an anticipated sales volume of 10,000 units to achieve net income of $100,000:

Fixed CostsVC Ratio

$25,000

SR FC = NI(70% SP/Unit # Units Sold)

10,000X --

25,00025,00025,0003,000X

= 100,000= 100,000= 100,000

3,000X = 125,0003,000 3,000

X = $41.67per unit

(.70 10,000X)7,000X

VC 25,000 = 100,000

10,000X

(SP/Unit # Units Sold)

-----

--

. ...

70%

Contribution Margin and CVP Practice

Page 1 of 2

$37,500

.25X.25

$37,500.25

$150,000

=

CF.25X

--

= $0= $0

=

(CM Ratio SR).

X

Then insert fixed cost of $37,500 into the original equation, and solve for X.

a. Calculate the breakeven volume in number of units given the following information:

10X - 7X - 39,000 = 0

SR - VC - FC = NI

Fixed costsVariable cost ratioSales price per unit

$39,000 70%

$10

X = 13,000 units

3X = 39,0003 3

b. Calculate the contribution margin per unit given the following information:

Contribution margin per unit:Sales price/unit - Variable cost/unit

OR...

SR - VC - FC = NI

25,000X = 225,00025,000 25,000

25,000X - 175,000 - 50,000 = 0

= $9 sales price per unit

X

$9 - $7 = $2

Breakeven volume 25,000 unitsFixed costs $50,000Variable cost per unit $7

b. Calculate the contribution margin per unit given the following information:

- FC = NISR - VCCM - FC = NI

- FC = 0CM/unit #units sold.

= 50,00025,000

25,000X25,000

= $2 contribution margin per unit

X

-25,000X 50,000 = 0

Breakeven volume 25,000 unitsFixed costs $50,000Variable cost per unit $7

Solve the following problems using the equational approach to CVP analysis:a.

b.

c.

Calculate the breakeven volume in number of units given the following information:Fixed costsVariable cost ratioSales price per unit

Calculate the contribution margin per unit given the following information:Breakeven volumeFixed costsVariable cost per unit

How many units must be sold at $20/unit to generate net income of $100,000 given the following:Fixed costsContribution margin ratio

$39,00070%

$10

25,000 units$50,000

$7

$40,00060%

Fixed costs $40,000Contribution margin ratio 60%

c. How many units must be sold at $20/unit to generate net income of $100,000 given the following:

12X - 40,000 = 100,000

=12X12

140,00012

X = 11,667 units rounded

CM - FC = NI

- FC = 100,000(.60 $20 #units sold). .

- FC = NISR - VC

Contribution Margin and CVP PracticeProblem: CVP Solution: CVP

Solution: CVP

Solution: CVP

Solution: CVP

Page 2 of 2

ii. Calculate the breakeven point in sales revenues.Sales Revenues

(SP/unit # units sold)$100 400 = $40,000.

.

A.

i. Calculate the breakeven point in # of units.

Given the following:Sales revenues# of units soldFixed costsNet income

$100,000 1,000 units $20,000 $30,000

($100/unit)

=X 400

=50X50

20,00050

50 = 20,000- 20,000 = 050

- - 20,000 = 0100 50- VC - FC = NISR

B. Given the following:Variable cost ratioFixed costs

Calculate the breakeven sales revenue.

65% 007,41$

SRX

--

.35X

VC.65X

---

FC14,70014,700.35X.35X.35X

====

=

=

NI00

14,70014,700

.35$42,000

C.

Calculate the # of units which must be sold to produce net income of $20,000.

First, you must determine the amount of fixed costs at breakeven:

NI=FC--SR VC0=FC--500,000 .(60% 500,000)0=FC--500,000 300,000

FC=200,000

Given the following:Breakeven Sales RevenuesContribution Margin RatioSales Price pre UnitContribution Margin per UnitVariable Cost per UnitVariable Cost Ratio

$500,000 40%

$100 $40 $60

60%

A. Given the following:Sales Revenues ($100/unit)# of Units SoldFixed CostsNet Income

i. Calculate the breakeven point in # of units.ii. Calculate the breakeven point in sales revenues.

$100,0001,000 units

$20,000$30,000

A.

B. Given the following:Variable Cost RatioFixed Costs

Calculate the breakeven Sales Revenue.

65%$14,700

C. Given the following:Breakeven Sales RevenuesContribution Margin RatioSales Price pre UnitContribution Margin per UnitVariable Cost per UnitVariable Cost Ratio


$500,00040%$100

$40$60

60%

Then solve the problem:


5,500 units

220,00020,00020,000

NI

220,00040

=

====

=

X

40X200,000200,000

FC

40X40

---

60XVC

40X--

100XSR

More Practice with CVPProblem: CVP Analysis

Solution: CVP Analysis




Problem: CVP Analysis

Page 1 of 3

In order to produce any plastic product through an injection molding process (i.e., plastic cups, kitchen utensils or even a plastic jello mold) a metal production mold created from a prototype of the given product must first be manufactured. Assume the cost of creating one production mold of the Salt Lake Temple is $20,000 and such a mold would be capable of producing a maximum of approximately 200,000 jello molds with no salvage value. Depreciation of the $20,000 production mold development costs are to be calculated based on the units of production method. At this time Heber plans to produce only temple jello molds.

Workman’s compensation insurance 10% of direct labor costsbefore payroll taxes

Utilities (80% of total fixed utility costs are manufacturing related and 20% due to selling and administrative office space)

$200 per month plus $.05 per unit produced

Building rent (2,000 total sq. ft. of which 80% of the building space will be for manufacturing and 20% for selling and administrative purposes)

$.70 per sq. ft. per month

Selling and administrative costs are projected as follows:

Heber plans to administer and manage the business and does not plan to pay himself a salary until the business can afford it.

Building Rent (see above)

Utilities (see above)

Telephones, fax

Copy machine rent, paper and other

Other office supplies

General liability insurance

Sales commissions to manufacturer’s sales representative

Accounting services

$300 per month

$250 per month

$150 per month

$.10 per unit sold

$50 per month

$500 per month

Required: PART 1: CVP ANALYSIS

1.

2.

3.

4.

Show the detail and totals of the following anticipated costs:A. Manufacturing (Product) Costs

1. Variable cost per unit (including direct materials, laborand mfg. overhead)

2. Fixed costs per monthB. Selling and Administrative (Period) Costs

1. Variable costs per unit2. Fixed costs per month

Determine the # of jello molds that would have to be sold in any month to simply breakeven.Determine the # of jello molds that would have to be sold in any month in order to provide Heber with a profit of $2,000 for the month.Calculate the sales price per unit that must be charged if Heber wishes to generate a monthly profit of at least $3,000 at a sales volume of 4,000 units per month.

Heber Smith, a college student in Utah, is investigating what he believes is a promising business opportunity. His idea is to manufacture and sell plastic jello molds in the form of the Salt Lake Temple. Heber has a tentative purchase commitment from a book and gift retail chain for 4,000 units over the first three months of initial operations. Based on his personal research and preliminary marketing efforts, he believes that the following is a reasonable estimate of total sales volume at a price of $ 2.50 per unit for the first quarter of operations beginning September 1, 20X1:

Business Feasibility Studyfor

HEAVENLY MOLDS, INC.

Sept. Oct. Nov.

Projected sales in # of units 2,000 3,000 4,000

Heber can lease a used injection molding machine for $2,000 per month plus $.08 per unit of production on a three year lease. Other manufacturing overhead costs expected on a monthly basis include the following:

Heber currently plans to manufacture the jello molds rather than contract out their production. The raw materials required for production of a single jello mold, regardless of design, is 1 lb. of polypropylene which can be purchased from a local supplier for $ .30 per lb.

Direct manufacturing labor costs are projected on a piece rate basis at $.20 per unit produced. Employer payroll taxes are estimated at 10% of the direct labor cost.

Indirect materials (equipment maintenance supplies and other)

$ 300 per month plus $.03 per unit

$ 250 per monthIndirect labor (equipment and mfg. building maintenance)

Direct Materials $.30Direct Labor .20Mfg. Overhead:

Employer Payroll Tax Machine Lease .08Indirect Materials .03Workman's Comp. .02Utilities .05Mold Depreciation .10

TOTAL $.80

.02

1A.1 Manufacturing (Product) Costs:

Variable Costs Per Unit:

More Practice with CVPProblem: Heavenly Molds Part 1 Problem: Heavenly Molds Part 1

Problem: Heavenly Molds Part 1Problem: Heavenly Molds Part 1

Problem: Heavenly Molds Part 1Problem: Heavenly Molds Part 1

Page 2 of 3

Determine the # of jello molds that would have to be sold in any month to simply breakeven.

2.

SR - VC - FC = NI2.50X - 0.90X - 5,400 = 0

1.60X1.60

5,4001.60=

X = 3,375 units

1.60X - 5,400 = 0

Determine the # of jello molds that would have to be sold in any month in order to provide Heber with a profit of $2,000 for the month.

3.

SR - VC - FC = NI2.50X - 0.90X - 5,400 = 2,000

1.60X1.60

7,4001.60=

X = 4,625 units

1.60X - 5,400 = 2,000

Calculate the sales price per unit that must be charged if Heber wishes to generate a monthly profit of at least $3,000 at a sales volume of 4,000 units per month.

4.

SR - VC - FC = NI4,000X - 3,600 - 5,400 = 3,000

4,000X4,000

12,0004,000=

X = $3.00 per unit

4,000X - 9,000 = 3,000

Mfg. Overhead:

TOTAL $3,830

1A.2 Manufacturing (Product) Costs:

Fixed Costs Per Unit:

1,120Building Rent (80% of fixed rent

costs of $1,400)

Utilities (80% of fixed utility costs of $200) 160

Indirect Labor 250Indirect Materials 300

$2,000Machine Lease

Utilities (20% of fixed utility costs of $200) 40

TOTAL $1,570

1B.1 Selling and Administrative Costs:Variable Costs Per Unit:

$280Building Rent (20% of fixed rent

costs of $1,400)

Copy Machine, Paper 250Telephones, Fax etc. 300

150Other Office Supplies

Sales Commissions $.10

1B.2 Selling and Administrative Costs:Fixed Costs Per Unit:

50General Liability Ins.500Accounting Service

More Practice with CVPSolution: Heavenly Molds Part 1 Solution: Heavenly Molds Part 1

Solution: Heavenly Molds Part 1



Page 3 of 3

introduction to cvp analysis · 2019-01-01 · cost-volume-profit analysis introduction to cvp...

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