c. Round your answer to the nearest whole number, i.e. no decimal points. So if your answer is 1234.60 you should write 1235. Lusk Corporation produces and sells 15,000 units of Product X each month. The selling price of Product X is $40 per unit, and variable expenses are $32 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $90,000 of the $120,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the company will be worse off by:
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
![a. Only whole numbers are to be entered as answers. Therefore, DO NOT put any signs in such as $, %, #, or a comma etc. in your
answer. For example, if your answer is $1234 you should write 1234 as your answer and if your answer is 4%, write 4 as your
answer.
b. Indicate a negative number by putting a minus sign in front. Therefore, if your answer is negative 1234 you need to post -1234 as
your answer.
c. Round your answer to the nearest whole number, i.e. no decimal points. So if your answer is 1234.60 you should write 1235.
Lusk Corporation produces and sells 15,000 units of Product X each month. The selling price of Product X is $40 per unit, and variable
expenses are $32 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $90,000 of
the $120,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is
discontinued, the company will be worse off by:
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