Concept Introduction:
Cost Volume Profit (CVP) Analysis:
The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.
Contribution margin means the margin that is left with the company after recovering variable cost out of revenue earned by selling smart phones. The formula for contribution margin is as follows:
Contribution margin = Sales - Variable cost.
Similarly contribution margin ratio = Contribution/sales
Breakeven Point:
The Breakeven point is the level of sales at which the net profit is nil. It can be explained as a situation where the business is generating a sale that is equal to the expenses incurred and hence no
Margin of Safety:
Margin of safety is sales over and above the breakeven level. Margin of safety can be calculated as dollar amount and in units as follows:
To Calculate:
The Margin of safety % for the year 20Y8
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Survey of Accounting (Accounting I)
- Sheridan Bucket Co., a manufacturer of rain barrels, had the following data for 2021: Sales quantity Unit selling price Unit variable costs Fixed costs 2,200 barrels $75 per barrel $45 per barrel $18,480arrow_forwardProfit volume ratio is used for the calculation of: Select one: O a. Profit at given sales O b. Breakeven point O c. Profit when margin of safety is given O d. For all options providedarrow_forwardIf Actual sales are OMR 490000, Total Fixed costs OMR 135000, Selling price per unit OMR 50, and Variable cost per unit OMR 35, which of the following shows Margin of Safety (MS) as amount and as percentage (on sales)? Soloctarrow_forward
- If Actual sales are OMR 470000, Total Fixed costs OMR 120000, Selling price per unit OMR 50, and Variable cost per unit OMR 35, which of the following shows Margin of Safety (MS) as amount and as percentage (on sales)?arrow_forwardLC3Q4.lf the Margin is 20 percent and cost of goods sold is OMR 33000, Calculate the sales figure?arrow_forwardIn computing the B/C ratio, is the annual revenue counted as benefits? Please compute the B/C ratio of MEA 5 and show your solution (not in excel). and explainarrow_forward
- Guiller Company's projected profit for the coming year follows PER UNIT P 20.00 12.00 P 8.00 TOTAL Sales Variable costs Contribution margin P2,480,000 1,488.000 992,000 626.400 P 365,600 Fixed cost Operating incomearrow_forwardFrom the following particulars you are required to calculate (a) P I V ratio and (b) Break-even point ( c) Margin of Safety Actual sales OMR. 200000 Variable cost OMR. 120000 Fixed cost OMR. 45000 Also calculate the sales required to maintain the profit OMR 72000.arrow_forwardWhich of the following ratios indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit? a. costs and expenses ratio b. contribution margin ratio c. margin of safety ratio d. profit ratioarrow_forward
- (a) Calculate the following:i. Break-even point in bottles and value ii.Total net profit for the year iii. Margin of safety in bottles and value Please provide a calculation for each of them.arrow_forwardThe sales price for a product provides a gross profit of 24% of sales price. What is the gross profit as a percentage of cost? O 24%. O Not enough information is provided to determine. O 19%. O 31.58%.arrow_forwardQ.3.5 Complete the following table by filling in the missing amounts: (6) Mark-up on Cost Price Profit Selling Price Cost (excluding VAT) (excluding VAT) (excluding VAT) 25% 1 000 100% 6 000 1 500 2 500arrow_forward
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning