Please complete Exercise Set A, Odd number problems. Attached is a PDF of the A Exercise Questions.? You can copy the questions into a Word document and answer the questions or use a Word do
Please complete Exercise Set A, Odd number problems. Attached is a PDF of the A Exercise Questions. You can copy the questions into a Word document and answer the questions or use a Word document to reflect just the questions.
Exercise A – Chapter 3 – Cost-Volume-Profit Analysis
EA1.
LO 3.1 Calculate the per-unit contribution margin of a product that has a sale price of $200 if the
variable costs per unit are $65.
EA2.
LO 3.1 Calculate the per-unit contribution margin of a product that has a sale price of $400 if the
variable costs per unit are $165.
EA3.
LO 3.1 A product has a sales price of $150 and a per-unit contribution margin of $50. What is
the contribution margin ratio?
EA4.
LO 3.1 A product has a sales price of $250 and a per-unit contribution margin of $75. What is
the contribution margin ratio?
EA5.
LO 3.2 Maple Enterprises sells a single product with a selling price of $75 and variable costs per
unit of $30. The company’s monthly fixed expenses are $22,500.
A. What is the company’s break-even point in units?
B. What is the company’s break-even point in dollars?
C. Construct a contribution margin income statement for the month of September when they
will sell 900 units.
D. How many units will Maple need to sell in order to reach a target profit of $45,000?
E. What dollar sales will Maple need in order to reach a target profit of $45,000?
F. Construct a contribution margin income statement for Maple that reflects $150,000 in
sales volume.
EA6.
LO 3.2 Marlin Motors sells a single product with a selling price of $400 with variable costs per
unit of $160. The company’s monthly fixed expenses are $36,000.
A. What is the company’s break-even point in units?
B. What is the company’s break-even point in dollars?
C. Prepare a contribution margin income statement for the month of November when they
will sell 130 units.
D. How many units will Marlin need to sell in order to realize a target profit of $48,000?
E. What dollar sales will Marlin need to generate in order to realize a target profit of
$48,000?
Exercise A – Chapter 3 – Cost-Volume-Profit Analysis
F. Construct a contribution margin income statement for the month of February that reflects
$200,000 in sales revenue for Marlin Motors.
EA7.
LO 3.3 Flanders Manufacturing is considering purchasing a new machine that will reduce
variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per
year. The information they will use to consider these changes is shown here.
EA8.
LO 3.3 Marchete Company produces a single product. They have recently received the results of
a market survey that indicates that they can increase the retail price of their product by 8%
without losing customers or market share. All other costs will remain unchanged. Their most
recent CVP analysis is shown. If they enact the 8% price increase, what will be their new break-
even point in units and dollars?
Exercise A – Chapter 3 – Cost-Volume-Profit Analysis
EA9.
LO 3.3 Brahma Industries sells vinyl replacement windows to home improvement retailers
nationwide. The national sales manager believes that if they invest an additional $25,000 in
advertising, they would increase sales volume by 10,000 units. Prepare a forecasted contribution
margin income statement for Brahma if they incur the additional advertising costs, using this
information:
EA10.
LO 3.4 Salvador Manufacturing builds and sells snowboards, skis and poles. The sales price and
variable cost for each are shown:
Exercise A – Chapter 3 – Cost-Volume-Profit Analysis
Their sales mix is reflected in the ratio 7:3:2. What is the overall unit contribution margin for
Salvador with their current product mix?
EA11.
LO 3.4 Salvador Manufacturing builds and sells snowboards, skis and poles. The sales price and
variable cost for each follows:
Their sales mix is reflected in the ratio 7:3:2. If annual fixed costs shared by the three products
are $196,200, how many units of each product will need to be sold in order for Salvador to break
even?
EA12.
LO 3.4 Use the information from the previous exercises involving Salvador Manufacturing to
determine their break-even point in sales dollars.
EA13.
LO 3.5 Company A has current sales of $10,000,000 and a 45% contribution margin. Its fixed
costs are $3,000,000. Company B is a service firm with current service revenue of $5,000,000
and a 20% contribution margin. Company B’s fixed costs are $500,000. Compute the degree of
operating leverage for both companies. Which company will benefit most from a 25% increase
in sales? Explain why.
Exercise A – Chapter 3 – Cost-Volume-Profit Analysis
EA14.
LO 3.5 Marshall & Company produces a single product and recently calculated their break-even
point as shown.
What would Marshall’s target margin of safety be in units and dollars if they required a $14,000
margin of safety?
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