Project 4

For this project, you will create a scenario for a business or other organization and use CVP analysis to show the following:

1. Breakeven in units
2. Breakeven in dollars
3. Target sales in units for achieving a $70,000 target NI
4. Target sales in dollars for achieving a $90,000 target NI
5. You realize that your scenarios actual capacity is limited to its breakeven number of units (BEu, as calculated in #1 above). Calculate what the new sales price (SP) should be in order to achieve a $12,000 NI using the BEu (#1 above) for sales volume (Q).
6. Same as #5, except this time calculate what the new variable cost per unit (VC) would need to be in order to achieve a $12,000 NI using the BEu (#1 above) for sales volume (Q).

Requirements:

1. Define each CVP variable for your scenario:

SP =

VC =

FC =

2. Calculate:

CM per unit =

CM ratio =

3. Calculate #1 6 above, showing all calculations