Chapter 21, Problem P21.68CT

Using Excel for cost-volume-profit(CVP) analysis

Download an Excel template for this problem online in MyAccountingLab or athttp:www.pearsonhighered.com/Horngren.

The Oceanside Garden Nursery buys flowering plants in four-inch pots for $1.00 each and sells them for $2.50 each. Management budgets monthly fixed costs of $2,100 for sales volumes between 0 and 5,000 plants.

Requirements

1. Use the contribution margin approach to compute the company's monthly breakeven point in units.
2. Use the contribution margin ratio approach to compute the breakeven point in sales dollars.
3. Use the contribution margin approach to compute the monthly sales level (in units) required to earn a target operating income of $5,000.
4. Prepare a graph of the company's CVP relationships. Include the sales revenue line, the fixed cost line, and the total cost line. Create a chart title and label the axes.