10014_031910_18 - 2. Decrease in salaries by $20,000...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
III. Examples of Changes in: SP, SV, Unit FC, Total FC Mountain Bike Example: SP = 500 SV = 500 units VC = 300 total FC = 80,000 1. FC will increase to $100,000 2. SV will double New CM: 1,000 x 200 (500-300) Old CM: 500 units x 200 Increase in CM 200,000 - Increase in FC 100,000 – 80,000 100,000 Increase in NI 100,000 <20,000> 80,000 1. VC will increase from 300 to 400 2. SV will increase 200 New CM: 600 units (500 x 1.2) x 100 (500 – 400) Old CM: 500 units x 200 (500 – 300) Decrease in CM 60,000 - No change in FC -0- 100,000 Decrease in NI <40,000> -0-_____ - 40,000 1. SP will decrease to $450 2. FC will increase to $100,000 3. SV will increase to 1,000 bikes New CM: 1,000 units x 150 (450 – 300) Old CM: 500 units x 200 (500 – 300) Increase in CM 150,000 - Increase in FC 100,000 – 80,000 100,000 Increase in NI 50,000 <20,000> 30,000 1. Sales commissions $50/bike (Increase VC)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 2. Decrease in salaries by $20,000 (Increase FC) 3. Sales increase by 20% New CM: 600 units (500 x 1.2) x 150 (500 350) Old CM: 500 units x 200 (500 300) Decrease in CM 90,000-Decrease in FC Saving 20,000 100,000 Increase in NI &lt;10,000&gt; 20,000__ 10,000 E. Change SP. Bulk Sales Over and above sales Should we do this? Yes. VC/unit stays the same FC stays the same What should we charge? The lowest price would be VC = $300 IV. Break Even Point Total Sales = Total Costs (FC + VC) Total CM = Total FC Number of units to produce and sell in order to have $0 income BEP (in units) = FC/Unit CM (SP-VC) BEP (in sales) = FC/CMR Example: 80,000/200 (500 300) = 400 bikes 80,000/0.40 (200/500) = $200,000 Use CMR to determine BEP when you have multiple product lines V. Target Profit Analysis In units = FC + NI/Unit CM In sales = FC + NI/CMR...
View Full Document

This note was uploaded on 08/25/2010 for the course ACCT 208 taught by Professor Kingery during the Spring '08 term at University of Delaware.

Page1 / 2

10014_031910_18 - 2. Decrease in salaries by $20,000...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online