lueprint Activity: Cost Behavior and Cost-Volume-Profit Analysis Cost Behavior H

Question

lueprint Activity: Cost Behavior and Cost-Volume-Profit Analysis Cost Behavior High-Low Contribution Margin Income Statement- Cover-to-Cover Cost Behavior Shaded cells have Con on Margirn Shaded cells have Review the contribution marain income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements panels. Complete the table below from the data provided in the income statements. Each company sold 84,800 units during Cover-to-Cover CompanyBiblio Files Company Contribution margin ratio (percent) 3096 $30,300.00x S58,30000 X sales (units) 3 x : $212,000.00 $291,500 00

Explanation / Answer

contribution margin% = contribution margin/ sales

no. of units = 84800

unit contribution margin = contribution margin/units

break even units = (fc + vc)/ units

break even sales is same as sum of variable cost and fixed cost.

For cover to cover

current profit = sales - fc - vc = 424000-127200-63600=233200

This has to increase by 40000 hence new profit is 273200

sales - fc- vc = profit

(unit sales * units) - (unit vc * units) - fc = profit

(profit + fc)/ (unit sales - unit vc) = units

unit vc = 296800/84800 =3.5

unit sales = 424000/84800 = 5

units = (277200+63600)/(5-3.5) = 224534 approx

For biblio

unit vc = 220480/84800 =2.6

unit sales = 424000/84800 = 5

units = (277200+63600)/(5-2.6) = 140334 approx

cover to cover Bibilio contribution margin ratio 127200/424000 0.3 203520/424000 0.48 Unit contribution margin 127200/84800 1.5 203520/84800 2.4 break even sales (units) (127200+63600)/5 38160 (203520+63600)/5 53424 break even sales (dollars) (127200+63600) 190800 (203520+63600) 267120

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