Demonstration_Problem_for_Chapter_3

# Demonstration_Problem_for_Chapter_3 - Demonstration Problem...

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Demonstration Problem for Chapter 3 Demonstration Problem 3-1 Cost-Volume-Profit Analysis Jeff Jamail is evaluating a business opportunity to sell cookware at trade shows. Mr. Jamail can buy the cookware at a wholesale cost of \$210 per set. He plans to sell the cookware for \$350 per set. He estimates fixed costs such as plane fare, booth rental cost, and lodging to be \$5,600 per trade show. Required a. Determine the number of cookware sets Mr. Jamail must sell at a trade show to break even (zero profit or loss). BE(units) = FC = \$5600 = 40 units CM/unit \$140/unit b. Assume Mr. Jamail desires to earn a profit of \$4,900 per show. (1) Determine the sales volume in units necessary to earn the desired profit. Sales volume = FC + DP = \$5600 + \$4900 = 75 units CM/unit \$140/unit (2) Determine the sales volume in dollars necessary to earn the desired profit. Sales volume = FC + DP = \$5600 + \$4900 = \$26250 CM Ratio 140/350 .4 (3) Using the contribution margin format, prepare an income statement to confirm

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Demonstration_Problem_for_Chapter_3 - Demonstration Problem...

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