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CVP Example_PEM.xlsx

CVP Example_PEM.xlsx - PEM INC(Given Data 1 Sales Units...

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PEM, INC. (Given Data) 1. Sales $585,000 Units sold 19,500 Sales price per unit $30 Less variable expenses 409,500 Contribution margin 175,500 Less fixed expenses 180,000 Net operating loss ($4,500) 2. Information for Part 2: Increase in monthly advertising budget $16,000 Increase in monthly sales $80,000 Information for Part 3: Reduction in selling price 10% Increase in monthly advertising budget $60,000 Increase in monthly unit sales 100% 3. Information for Part 4: Increase in packaging cost per unit $0.75 Targeted profit each month $9,750 Information for Part 5: Reduction in variable costs per unit $3 4. Increase in monthly fixed costs $72,000 Expected sales in units 26,000 Check figures: (3) Net Loss $6,000 (5a) Break-even units 21,000 5a. 5b.
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PEM, INC. Contribution margin ratio: Percent Total Per Unit of Sales Sales $585,000 $30 100% Less variable expenses 409,500 21 70% Contribution margin $175,500 $9 30% Break-even point (units) 20,000 Correct! Break-even point (dollars) $600,000.00 Correct! Incremental contribution margin: Increased sales
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