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Study Guide - Exam II

by: Anna Notetaker

Study Guide - Exam II ACCT

Anna Notetaker
GPA 3.62

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About this Document

Breakeven Formulas and step through of how to work problems like on exam
Managerial Accounting
Monica Davis
Study Guide
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This 2 page Study Guide was uploaded by Anna Notetaker on Saturday September 24, 2016. The Study Guide belongs to ACCT at Middle Tennessee State University taught by Monica Davis in Fall 2016. Since its upload, it has received 27 views.


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Date Created: 09/24/16
Anna Jacobs Project 1 – 20 points ACTG3020 For this project, you will create a scenario for a business or other organization and use  CVP analysis to show the following: 1. Breakeven in units 2. Breakeven in dollars 3. Target sales in units for achieving a $50,000 target NI 4. Target sales in dollars for achieving a $50,000 target NI 5. Calculate what the new sales price should be in order to achieve a $10,000 NI  using the breakeven in units (#1 above) for sales volume (Q) 6. Calculate what the variable cost per unit would need to be in order to achieve a  $10,000 NI using the breakeven in units (#1 above) for sales volume (Q) Requirements: A. Define each CVP variable for your scenario: SP = $30 VC = $12 FC = $3,000 B. Calculate:   CM per unit = SP per Unit – VC per Unit, so it is $30 ­ $12 = $18 CM ratio = CM per Unit/SP per Unit, so it is $18/$30 = 0.6 or 60% C. Calculate #1 – 6 above, showing all calculations 1. Breakeven in Units:  (SP*Q) – (VC*Q) – FC = $0  FC/CM per Unit = $0 $30Q – $12Q ­ $3,000 = $0 or $3,000/$18 = $0 $30Q ­ $12Q = $3,000 = 166.67 Units or 167 Units $18Q = $3,000 Q = $3,000/$18 Q = 166.67 Units or 167 Units 2. Breakeven in $: Anna Jacobs FC/CM Ratio = $0 $3,000/0.6 = $0 =$5,000 3. Target sales in units for achieving a $50,000 target NI:  FC + Target NI/ CM per Unit $3,000 + $50,000/$18 $53,000/$18 =2,944.44 Units or 2,944 Units 4. Target sales in dollars for achieving a $50,000 target NI: FC + Total NI/CM Ratio $3,000 + $50,000/0.6  $53,000/0.6 =$83,333.33 5. Calculate what the new sales price should be in order to achieve a $10,000  NI using the breakeven in units (#1 above) for sales volume (Q): SP*Q – VC*Q – FC = NI SP*167 ­ $12*167 ­ $3,000 = $10,000 SP*167 ­ $2,004 = $13,000 SP*167 = $15,004 SP = 89.84 6. Calculate what the variable cost per unit would need to be in order to  achieve a $10,000 NI using the breakeven in units (#1 above) for sales  volume (Q): SP*Q – VC*Q – FC = NI $30*167 – VC*167 ­ $3,000 = $10,000 $5,010 – VC*167 = $13,000 VC*167 = $7,990 VC = 47.84 


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