# Question: Cost volume pro t analysis is used to analyze the relationship between revenues

Cost-volume-proﬁt analysis is used to analyze the relationship between revenues, variable costs, ﬁxed costs, proﬁts, and units produced.

Required:

For each of the following situations, calculate the missing items.

(a) Acme, Inc. sells its product for $45. The variable cost per unit is $24, and ﬁxed costs are $1,672,500. What proﬁt will Acme make if 225,000 units are produced and sold?

(b) Beta Co. can sell 140,000 units in one year. Variable costs are $130 per unit, and ﬁxed costs are $4,040,000. How much should Beta sell its product for per unit if the company wants to make a pretax proﬁt of $2,260,000?

(c) Capitol Enterprises sells 85,400 units in one year. The product has a contribution margin of $44, and ﬁxed costs are $1,907,600. What is Capitol Enterprises’ pretax proﬁt?

(d) Denson, Inc. sells its product for $135. The product has a variable cost of $105 and ﬁxed costs of $36,000,000. How many units should the company sell if it wants to earn pretax proﬁts of $27,000,000?

(e) Edgar Co. has a tax rate of 35 percent. The company sells a product with an $18.50 contribution margin; ﬁxed costs of $9,000,000 are incurred by the company annually. How many units should the company sell if it wants to earn after-tax proﬁts of $3,325,000?

Required:

For each of the following situations, calculate the missing items.

(a) Acme, Inc. sells its product for $45. The variable cost per unit is $24, and ﬁxed costs are $1,672,500. What proﬁt will Acme make if 225,000 units are produced and sold?

(b) Beta Co. can sell 140,000 units in one year. Variable costs are $130 per unit, and ﬁxed costs are $4,040,000. How much should Beta sell its product for per unit if the company wants to make a pretax proﬁt of $2,260,000?

(c) Capitol Enterprises sells 85,400 units in one year. The product has a contribution margin of $44, and ﬁxed costs are $1,907,600. What is Capitol Enterprises’ pretax proﬁt?

(d) Denson, Inc. sells its product for $135. The product has a variable cost of $105 and ﬁxed costs of $36,000,000. How many units should the company sell if it wants to earn pretax proﬁts of $27,000,000?

(e) Edgar Co. has a tax rate of 35 percent. The company sells a product with an $18.50 contribution margin; ﬁxed costs of $9,000,000 are incurred by the company annually. How many units should the company sell if it wants to earn after-tax proﬁts of $3,325,000?

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