Custom Value Products makes and sells asingle product in a 7-state area. Informationfor their product is below:$281.00185.00Unit Selling PriceUnit Variable CostTotal Fixed Cost $3,400,000Expected sales12,000 unitsRequired:Use the CVP template to calculate thecompany's break-even point in both unitsand sales dollars as well as their expectedincome for next year at their planned salesvolume. Ignore income taxes for thiscalculation.If the company's variable cost ofmanufacturing decreases by 5% next yearand they reduce their selling price by 5%,will their break-even point and expectedincome increase or decrease? Showcalculations.Explain in your own words how addinganother product to their offerings wouldchange their CVP calculations.

Break Even Analysis: It is refer to the study of relationship between cost, volume and profit at a…

Answered: single product in a 7-state area. Infor…

Business

Accounting

single product in a 7-state area. Infor for their product is below: Unit Selling Price $281.00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Custom Value Products makes and sells a
single product in a 7-state area. Information
for their product is below:
$281.00
185.00
Unit Selling Price
Unit Variable Cost
Total Fixed Cost $3,400,000
Expected sales
12,000 units
Required:
Use the CVP template to calculate the
company's break-even point in both units
and sales dollars as well as their expected
income for next year at their planned sales
volume. Ignore income taxes for this
calculation.
If the company's variable cost of
manufacturing decreases by 5% next year
and they reduce their selling price by 5%,
will their break-even point and expected
income increase or decrease? Show
calculations.
Explain in your own words how adding
another product to their offerings would
change their CVP calculations.

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