CVP exercises the Super Donut owns and operates six doughnut outlets in and around Kansas City. You

Question:

CVP exercises the Super Donut owns and operates six doughnut outlets in and around Kansas City. You are given the following corporate budget data for next year:

Revenues $10,000,000

Fixed costs $ 1,800,000

Variable costs $ 8,000,000

Variable costs change with respect to the number of doughnuts sold.

Compute the budgeted operating income for each of the following deviations from the original budget data. (Consider each case independently.)

1. A 10% increase in contribution margin, holding revenues constant

2. A 10% decrease in contribution margin, holding revenues constant

3. A 5% increase in fixed costs

4. A 5% decrease in fixed costs

5. An 8% increase in units sold

6. An 8% decrease in units sold

7. A 10% increase in fixed costs and a 10% increase in units sold

8. A5°i4ncrease in fixed costs and a 5% decrease in variable costs

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Cost Accounting A Managerial Emphasis

ISBN: 978-0136126638

13th Edition

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

Question Posted: