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 MarginContribution 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...
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 978-0136126638
13th Edition
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav