Answers: CVP Exercises 5-18, 5-11, 5-12 and 2-4

Ricardo R. Palo

A. S
VC
CM
FC
0+-

Units sold
CM/unit

B.
S
VC
CM
FC
0+-

CM%

Answer 5-11
 4

Answer 5-12
Units
Sales
VC
CM
FC
0+-

2 Higher variable cost will re

it will require higher sales
X
2604
2856
3534
1440
540
1116
3162
3608
1260
186
1080
2046
 1 2 3 4 Units CM per Profit
270000 350000 400000 160000 Case Sold Sales VC CM Unit FC (Loss)
162000 140000 280000 90000 1 9000 270000 162000 108000 12 90000 18000
108000 210000 120000 70000 2 14000 350000 140000 210000 15 170000 40000
90000 170000 85000 82000 3 20000 400000 280000 120000 6 85000 35000
18000 40000 35000 -12000 4 5000 160000 90000 70000 14 82000 -12000

9000 14000 20000 5000

12 15 6 14

1 2 3 4 Ave CM Profit
450000 200000 700000 300000 Case Sales VC CM % FC (Loss)
270000 130000 140000 90000 1 450000 270000 180000 0.40 115000 65000
180000 70000 560000 210000 2 200000 130000 70000 0.35 60000 10000
115000 60000 470000 225000 3 700000 140000 560000 0.80 470000 90000
65000 10000 90000 -15000 4 300000 90000 210000 0.70 225000 -15000

0.4 0.35 0.8 0.7

Answer 5-11 1 2 3 5
 Units Per Unit % 12500 14000 80000
Sales 40 1.00 500000
VC 28 0.70
CM 12 0.30 150000 150000 168000 24000
FC 150000 150000 0
0+- 0 18000 24000

Sales 600000
Break-even sales 500000
Margin of Safety 100000

Margin of Safety % 0.1667

1 3a 3b 4
Per Unit % 5000 8000 10000 11500
90 1.00 450000 90 720000 81 810000 81
63 0.70 63 504000 63 630000 63
27 0.30 135000 27 216000 18 180000 18 207000
135000 135000 135000 135000
0 81000 45000 72000

Higher variable cost will result to lower contribution margin. If there is lower contribution margin,
it will require higher sales to break-even.
Y
6257 1 a (intercept) 1353.406 Y = 1353 + 1.87X
6550 b (slope) 1.86775
7986
4022 fit (rsq) 0.998983
2289
3591
7264 2 Area size
8111 Quality of equipment
3707 Weather
1712
3321
5196