Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions
3-11
Exercise 3-8
a.
$12x – $3x – $432,000a =
$0
$9x =
$432,000
x =
48,000 frisbees to breakeven
48,000 frisbees $12 =
$576,000 breakeven sales $
b.
$9x =
$432,000 + $18,000
x =
50,000 frisbees
c.
$16,200
(1 .4)
= $27,000
d.
$9x =
$432,000 + $27,000
x =
51,000 frisbees
3-12
Exercise 3-9
b.
$64x – $40x – $600,000 =
$0
$24x =
$600,000
x =
25,000 chairs to breakeven
or
$,
$
600 000
24
= 25,000 chairs
c.
$64x – $40x – $600,000 =
$54,000
$24x =
$654,000
x =
27,250 chairs to breakeven
or
$600,000 + $54,000
$24
=
$654,000
$24
= 27,250 chairs
d.
$64x – $40x – $600,000 =
,
.
$71136
1 35
$24x =
$709,440
x =
29,560 chairs to breakeven
or
$71,136
$600,000 1 .35
$24
=
$600,000 + $109,440
$24
=
$709,440
$24
=
Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions
3-13
Exercise 3-10
$390,000
$600,000
or
$32.50
$50.00
= .65 or 65%
b. Margin of safety = Current sales – Breakeven sales
Breakeven sales =
$292,500
.65
=
$450,000
OR: Breakeven sales =
$292,500
$32.50
=
9,000 units;
9,000 × $50 = $450,000
Margin of safety =
$600,000 – $450,000
=
$150,000
c. Net operating income would increase by the change in contribution
3-14
Exercise 3-10, continued
d.
new variable cost =
$17.50 1.16
=
$20.30
new price =
$50 1.1
=
$55
current unit sales =
=
12,000
new unit sales =
12,000 .98 = 11,760
operating income =
[($55.00 – $20.30) 11,760] – $292,500
=
$115,572
50
$600,000
3-15
Exercise 3-11
a. Operating income would increase by the change in contribution
margin:
contribution margin ratio =
=
.6 or 60%
change in operating income =
$39,000 .6
=
$23,400
b.
operating income last year =
(32,000 $18.00) – $360,000
=
$216,000
new price =
$30.00 .95
=
$28.50
new fixed expenses =
$360,000 + $50,000
=
$410,000
new unit sales =
32,000 1.3
=
41,600 units
projected income =
[($28.50 – $12.00) 41,600] – $410,000
=
$276,400
income.
$30
$12–$30
Exercise 3-12
3-17
Exercise 3-13, continued
b. Operating income will increase by the increase in contribution margin
Additional units sold =
100,000 .15
=
15,000
Additional contribution margin =
15,000 additional units ($40 .6)
=
$360,000
c. new variable cost: .45 $40 = $18 per unit
Sales – VC – FC =
$0
$44x – $18x – $1,560,000 =
$0
$26x =
$1,560,000
x =
60,000 blankets
60,000 blankets $44 =
$2,640,000
d. new variable cost: .45 $40 = $18 per unit
Sales – VC – FC =
Operating Income
($26 95,000) – $1,560,000 =
$910,000
blankets, operating income is:
blankets.
3-18
Exercise 3-14
a.
($3.00 – $1.75)x – $25,000 =
$0
$1.25x =
$25,000
x =
20,000 hamburgers
b.
($3.00 – $1.75)x – $25,000 =
$6,000
$1.25x =
$25,000 + $6,000
x =
24,800 hamburgers
c.
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
0 5,000 10,000 15,000 20,000 25,000
Sales
Costs
Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions
Exercise 3-15
$304,000
3-20
Exercise 3-17
lowers the breakeven point.
b. Warner’s margin of safety would increase. The margin of safety is
Exercise 3-18
and distribution of a print book.
c. As sales of the Kindle ebooks increase relative to print books, the