Cost Volume Profit

Vin Diesel owns the Fredonia Barber Shop. He employs four barbers and pays each a base rate of $1,250 per month. One of the barbers serves as the manager and receives an extra $500 per month.

Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 75 cents per bottle. For the year 2017, management estimates the following revenues and costs.

Tanek Corp.'s sales slumped badly in 2020. For the first time in its history, operated at a loss. The company's income statement showed the following results from selling 500,000 units of product: sales $2,5oo,000 total cost and expenses $2,600,000, and net loss $100,000. cost and expenses consisted of the amount shown below.

Mary Willis is the advertising manager for Bargain shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will and $24,000 in fixed costs to the $270,000 currently spent. In addition, Mary is proposing that a 5% price decrease will produce a 20% increase in sales volume. Variable costs will remain at $24 per pair of shoes. Management is impressed with Mary's ideas but concerned about the effects that these changes will have on the break even point and the margin of safety.

Viejol Corporation has collected the following information after its first year of sales. Sales were $1,600,000 on 1oo,000 units, selling expenses $250,000, direct materials $490,000, direct labor $290,000, administrative expenses $270,000, and manufacturing overhead $380,000. Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that units sale increase by 10% net year.

Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2020 the first year of operations, Jackson produced 4,000 tons of plastic and sold 3,500 tons. In 2020, the production and sales results were exactly reversed. In each year the selling price per ton was $2,000, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were $800,000, and fixed administrative expenses were $500,000.

Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.

The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.

Family Furniture Corporation incurred the following costs.

Marty Moser wants Moser Company to use CVP analysis to study the effects of changes in costs and volume on the company. Marty has heard that certain assumptions must be valid in order for CVP analysis to be useful.

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