CVP Case Study #2 - Cost Volume Profit Analysis Case Study Mrs Brassine ACCT 2521 Class Summer 2015 Wake Me Up Coffee Company sells one size cups of

CVP Case Study #2 - Cost Volume Profit Analysis Case Study...

This preview shows page 1 - 2 out of 2 pages.

Cost Volume Profit Analysis Case Study Mrs. Brassine ACCT 2521 Class Summer 2015 Wake Me Up Coffee Company sells one size cups of plain old black coffee on the street corners of a large metropolitan city. Its contribution margin income statement is as follows for the 1 st quarter of 2015: Wake Me Up Coffee Company Contribution Margin Income Statement For the Quarter Ended March 31, 2015 Sales Revenue ($1.50 per cup) $337,500 Less Variable Expenses: Cost of Goods Sold $101,250 Marketing Expenses 18,000 General & Administrative Expenses 15,750 135,000 Contribution Margin $202,500 Less Fixed Expenses: Marketing Expenses $50,000 General & Administrative Expenses 17,300 67,300 Operating Income $135,200 Wake Me Up Coffee Company wants to stay with its current supplier of coffee; however, the current supplier is increasing its prices quite substantially by $6.00 per pound of coffee. Each pound of coffee makes 40 cups of coffee. (Hint: You will need to convert price per pound of coffee to price per cup.) Due to recent growth, Wake Me Up Coffee Company has decided to hire a new manager that would cost the company $8,500 per quarter for the new position’s salary. Wake Me Up Coffee Company believes that it can reduce variable marketing expenses by $0.03 per cup by increasing fixed marketing expenses by $2,500.
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read both pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes