COST BEHAVIOR AND COST-VOLUME-PROFIT ANALYSIS

This assignment consists of three independent scenarios for which computations should be shown.

Scenario A

Compute the break-even point in sales dollars if fixed costs are $200,000 and the total contribution margin is 10% of revenue.

Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.

Scenario B

Danny Company makes and sells stuffed animals. One product, Panda Bear, sells for $28 per bear. Panda Bears incur fixed costs of $120,000 per month and a variable cost of $12 per bear. How many Panda Bears must be produced and sold each month to break even?

Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.

Scenario C

Jerry is considering buying a company if it will break even or earn net income on revenues of $100,000 per month. The company that Jerry is considering sells each unit it produces for $5. Use the following cost data to compute the variable cost per unit and the fixed cost for the period. Calculate the break-even point in sales dollars. Should Jerry purchase this company?

Volume (units)    Total Cost
8,000    $70,000
68,000    $190,000

Scenario C is more involved than the other three. HINT: You can use the high-low method to determine the fixed and variable portions of the total costs. See for example http://www.principlesofaccounting.com/chapter-18/behavior-analysis/ (from the optional resource in the background material).

Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.

attached is example of table needed

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