Graphical Approach For Cvp Analysis (Break-Even Chart) Worksheet - Chapter 3 Page 6
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Chapter 3
| Break-Even and Cost-Volume-Profit Analysis
| Exercises
3.2
Answers to odd-numbered problems are available online
For the following problems, express the answers rounded to two decimal places, wherever applicable.
1.
The market research for the production and sale of a new pair of boots indicates that it can be sold for $185 per
pair. The cost details are as follows: variable costs: $95 per pair, fixed costs: $8100 per period, and production
capacity: 180 pairs per period.
a. Draw a detailed break-even chart showing the fixed costs line, total costs line, total revenue line, break-even
point, and profit and loss areas.
b. Determine the break-even volume and break-even revenue, and compute the break-even as a percent of
the production capacity.
2. The market research for the production and sale of a new dress indicates that it can be sold for $175 per dress. The
cost details are as follows: variable costs: $85 per dress, fixed costs: $7200 per period, and production capacity:
300 units per period.
a. Draw a detailed break-even chart showing the fixed costs line, total costs line, total revenue line, break-even
point, and profit and loss areas.
b. Determine the break-even volume and break-even revenue, and compute the break-even as a percent of the
production capacity.
3.
Chenkowski Motors was selling an automotive component for $170 per unit. The cost details are as follows:
variable costs: $80 per unit, fixed costs: $6300 per period, and production capacity: 190 units per period.
a. Draw a detailed break-even chart showing the fixed costs line, total costs line, total revenue line, break-even point, and
profit and loss areas.
b. Determine the break-even volume and break-even revenue, and compute the break-even as a percent of the
production capacity.
c. What was the amount of profit or loss if 50 components were sold in a period?
d. What is the maximum profit that can be expected in a period?
4. An electronics manufacturer was selling an electronic gadget for $155 per unit. The cost details are as follows:
variable costs: $65 per unit, fixed costs: $7200 per period, and production capacity: 250 units per period.
a. Draw a detailed break-even chart showing the fixed costs line, total costs line, total revenue line, break-even point, and
profit and loss areas.
b. Determine the break-even volume and break-even revenue, and compute the break-even as a percent of the
production capacity.
c. What was the amount of profit or loss if 150 gadgets were sold in a period?
d. What is the maximum profit that can be expected in a period?
5.
A firm manufactures a product which sells for $12 per unit. The variable costs consist of two parts: the variable
manufacturing costs are $6 per unit and the variable selling costs are $1.50 per unit. The fixed costs are $2475 for
the period. The capacity is 1500 units per period.
a. Draw a detailed break-even chart showing the fixed costs line, total costs line, total revenue line, break-even point, and
profit and loss areas.
b. Determine the break-even volume and break-even revenue, and compute the break-even as a percent of the
capacity.
c. What is the new break-even point in units if the fixed costs are increased by $1095 in a period and the variable
manufacturing costs per unit are decreased by 10%?
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