Answered: (a) Use CVP analysis to determine the…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 29BEB: Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and...

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Question

Comex Company produces backpacks. Annual budget data for FY 2021 follows.
Projected sales are 50,000 backpacks for FY 2021. Show workings.
Sales revenue $2,500,000
Manufacturing costs:
Fixed 632,000
Variable 500,000
Selling and Administrative costs:
Fixed 200,000
Variable 700,000
(a) Use CVP analysis to determine the unit contribution margin, breakeven point in
units and breakeven point in dollars.

(b) Use CVP analysis to determine the profit for FY 2021. Ignore income taxes.

(c) Use CVP analysis to determine the number of required units if Comex Company
plans to double the profit computed in Question 4b. Ignore income taxes.

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