Cost Accounting (15th Edition)
Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
Question
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Chapter 3, Problem 3.28E

1.

To determine

Cost-Volume-Profit Analysis (CVP Analysis):

CVP Analysis is a tool of cost accounting that measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs.

Break-Even Point:

Break-even point is a point of sales where company can cover all its variable and fixed costs. It is a point of sales where revenue generated is equal to the total costs. Thus, profit is zero at this level of sales.

Contribution Margin Percentage:

Contribution margin percentage is the excess of selling price over variable cost demonstrated in percentage.

To compute: Break-even point.

2.

To determine

To compute: Total contribution margin and operating income when 168,000 units are sold.

3.

To determine

To compute: Total contribution margin and operating income when 168,000 units are sold.

4.

To determine

To explain: Comparison between break-even point in point 1 and 3. Lower break-even points are not always better.

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Cost Accounting (15th Edition)

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