please include what cells were added to get the answer CVP Analysis 1. Determine
ID: 2545759 • Letter: P
Question
please include what cells were added to get the answer
CVP Analysis 1. Determine the break-even polnt. 2. Compute the margin of safety and explaln Its significance 3. Compute the degree of operating leverage at a particular level of sales and explaln how It can be used to predict changes In net operating Income CVP Analysis - Excel ILE HOME INSERT PAGE LAYOUTFORMULAS DATA REVIEWVIEW Calibri H . A. Alignm ent Num ber Conditional Format as Cell Cells Editing Paste Clipboard F D2 Formatting Table" Styles 1Given the following information complete a CVP analysis 2 for JPL, Inc. 4 Unit sales 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses 11,200 units $75 per unit $45 per unit $210,000 9 Use the data to answer the following 10 11 1. Compute the CM ratio and variable expense ratio 12 Selling price per unit 13 Variable expenses per unit 14 Contribution margin per unit 15 16 CM ratio 17 Variable expense ratio 18 19 2. Compute the break-even point 20 Break-even in unit sales 21 Break-even in dollar sales per unit per unit = per unit units 23 3. Compute the margin of safet 24 Margin of safety in dollars ...Sheet1 |Explanation / Answer
Solution:
Selling price per unit = $75
Variable expense per unit = $45
Contribution margin (CM) per unit = 75 - 45 = $30
CM ratio = CM/Sales =30/75 = 0.4 or 40%
Variable expense ratio = Variable expense/Sales
= 45/75 = 0.6 or 60%
Break-even in unit sales = Total Fixed expenses/CM per unit = 210,000/30 = 7,000 units
Break-even in dollars sales = 7000*75
= $525,000
Margin of safety in dollars = Actual sales - Break-even sales = (11,200*75) - 525,000 = $315,000
Margin of safety percentage = (margin of safety × 100) / Sales = (315000*100)/840000 = 37.5%
Computation of Operating leverage:
Particulars Amount ($) Sales 840,000 Less: Variable expense 504,000 Contribution margin 336,000 Less: Fixed expenses 210,000 Net operating income 126,000 Operating leverage (contribution margin/Net operating income) 2.67Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.