Unformatted text preview: f 6,250
prints generates revenue of $3,750). Orientation Target Volume in Units To ﬁnd the target volume, we use the proﬁt equation with the
target proﬁt speciﬁed. The formula to ﬁnd the target volume in units is
Target proﬁt
_Fixed costs
_______________________ and Organizing Yourself
Using the data from UDevelop, we ﬁnd the volume that provides an operating proﬁt of
for Success in College
Target volume (units) Preparing
Contribution margin per unit $1,800 as follows:
Target volume Target proﬁt
_Fixed costs
_______________________
Contribution margin per unit $1,500 $1,800
______________
$.24
13,750 prints
UDevelop must sell 13,750 prints per month to achieve the target proﬁt of $1,800. Each
additional print sold increases operating proﬁts by $.24.
CH
P
ERS
Target Volume in Sales Dollars To ﬁnd the target volume in sales dollars,A weT use the I N P A R T O N
contribution margin ratio instead of the contribution margin per unit. The formula to ﬁnd
the target volume follows:
1 Making Yourself Successful in College Target volume (sales dollars) E Fixed costs Target proﬁt
______________________ Contribution margin ratio
2 Approaching College Reading and For UDevelop the target volume expressed in sales dollars is Developing a CollegeLevel Vocabulary
Target volume (sales dollars) $1,500 $1,800
______________ 3 .Approaching College Assignments:
40 Note that sales dollars of $8,250 translates into 13,750 printsReadingeach. We getand Following Directions
at $.60 Textbooks the
same target volume whether expressed in units (13,750 prints) or dollars (sales of 13,750
prints generates revenue of $8,250).
Exhibit 3.2 summarizes the four formulas for finding breakeven and target
volumes. Exhibit ✓ Related Resources
3.2 BreakEven Volume
Breakeven volume (units)
Breakeven volume (sales dollars) Fixed costs
____________________
Unit contribution margin Fixed costs
____________________
Contribution margin ratio Target Volume
Target volume (units) Fixed costs Target proﬁt
______________________ Target volume (sales dollars) tions related to the chapters
in Part One. 1 Fixed costs Target proﬁt
______________________ cor50782_ch01_001072.indd 1 lan27114_ch03_080109.indd 85 Summary ofpages 000 to 000
See BreakEven and Target Volume
of the Annotated Instructor’s
Formulas
Edition for general sugges Unit contribution margin Contribution margin ratio 10/5/09 11:09:29 PM 10/22/09 10:33:53 PM REVISED PAGES Part II 86 Cost Analysis and Estimation Exhibit 3.3
CVP Graph—UDevelop PART $8,000 Revenues, Costs $7,000
$6,000
$5,000
TC $4,000 Total cost
$1,500 $.36 X 1 Orientation $5,820 Break even
TR TC $3,000 Preparing and Organizing Yourself
for Success in College
Total revenue $2,000
$1,000
$0 $7,200 TR
0 2,000 4,000 $.60 X
6,000 8,000 10,000 12,000 Volume per period (X ) Graphic Presentation
Exhibit 3.3 presents the costvolumeproﬁt (CVP) relations for UDevelop in a graph.
Such a graph is a helpful aid in presenting costvolumeproﬁt relationships. We plot dollars on the vertical axis (revenue...
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This note was uploaded on 02/07/2014 for the course MIS 304 taught by Professor Mejias during the Spring '07 term at Arizona.
 Spring '07
 MEJIAS

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