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    Assignment 2 - CVP Analysis

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    Inke Rentandatu
    The document is an accounting assignment that contains calculations related to contribution margin analysis. It includes an initial contribution margin income statement, definitions of contribution margin ratio and per unit contribution margin. It then shows how to calculate the change in income from operations if sales increase by 3,000 units using either the per unit contribution margin or contribution margin ratio approach. Both approaches show the change in income from operations would be an increase of $90,000.

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    Assignment 2 - CVP Analysis

    Uploaded by

    Inke Rentandatu
    145 views1 page
    The document is an accounting assignment that contains calculations related to contribution margin analysis. It includes an initial contribution margin income statement, definitions of contribution margin ratio and per unit contribution margin. It then shows how to calculate the change in income from operations if sales increase by 3,000 units using either the per unit contribution margin or contribution margin ratio approach. Both approaches show the change in income from operations would be an increase of $90,000.

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    The document is an accounting assignment that contains calculations related to contribution margin analysis. It includes an initial contribution margin income statement, definitions of contribution margin ratio and per unit contribution margin. It then shows how to calculate the change in income from operations if sales increase by 3,000 units using either the per unit contribution margin or contribution margin ratio approach. Both approaches show the change in income from operations would be an increase of $90,000.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    145 views1 page

    Assignment 2 - CVP Analysis

    Uploaded by

    Inke Rentandatu
    The document is an accounting assignment that contains calculations related to contribution margin analysis. It includes an initial contribution margin income statement, definitions of contribution margin ratio and per unit contribution margin. It then shows how to calculate the change in income from operations if sales increase by 3,000 units using either the per unit contribution margin or contribution margin ratio approach. Both approaches show the change in income from operations would be an increase of $90,000.

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    Inke Rentandatu

    25/08/2021
    Accounting for Managers Assignment 2

    Answer

    1) Contribution Margin Income statement


    Sales (20,000 units x $ 120) $ 2,400,000
    (Less) Variable Costs (20,000 units x $90) $ 1,800,000
    Contribution Margin (20,000 units x $30) $ 600,000
    Fixed Costs $ 250,000
    Income from operations $ 350,000

    2) Contribution Margin Ratio


    = Contributin Margin/sales
    $600,000/$2,400,000 = 0.25 or 25%
    Contribution margin units
    = Sales price per unit - Variable cost per unit
    $120-$90=$30

    3) How much would income from operations change,


    if Toussant's sales increased by 3,000 units
    A) We can calculate unit contribution margin Increase in income
    = 3,000 units x $30 = $90,000
    B) Calculate using contribution margin ratio
    Change in sales dollars (3,000 units X $120) = $360,000
    Sales x contribution margin ratio = $360,000 X 25% = $90,000

    Contribution margin income statement

    Sales (23,000 units x $120) $ 2,760,000


    (Less) Variable costs (23,000 units x $90) $ 2,070,000
    Contribution Margin (23,000 units x $30) $ 690,000
    Fixed Costs $ 250,000
    Income from operations $ 440,000

    $440,000 (new) - $350,000 (old) = $90,000

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