CVP Analysis: Another Practice Problem

University Company is planning a fund raiser for the upcoming semester. They know that you have taken Managerial Accounting at W University and seek your assistance in performing the financial analysis. They have provided you with the information below. They plan on selling accounting handouts and other academic supplements to help students perform better in accounting.

Sales price per handout $q,$

$$10\mathrm{.}00$

Direct labor to prepare one handout $q,$

$$5\mathrm{.}00$

$$2\mathrm{.}00$

Cost of the paper per handout $q,$

$$1\mathrm{.}00$

Electricity costs to run the duplicating machine per handout $q,$

Depreciation on the duplicating machine under the straight line method is $q,$ $$2,000,00$

Salary of an outside advisor in the accounting area $q,$ $$3,000\mathrm{.}00$

Required:

Compute the company's CM per unit and CM ratio.

CM per Unit

CM Ratio

Compute the company's break$-$even point in handouts $($units$)$ and in dollars $($volume$).$

BEU

$1$

BE $

$3.$ Prepare a Contribution Income Statement at the break$-$even point.

$$

$$

$$

$$

$$

$$

$$

$$

$$

$$

Net Income