Assignment: Cost-Volume-Profit Analysis
Cost-Volume-Profit Analysis Belli-Pitt, Inc, produces a single product. The results of the company's operations for a typical month are summarized in contribution format as follows:
Sales................................... $540,000
Variable expenses.............. 360,000
Contribution margin .......... 180,000
Fixed expenses .................. 120,000
Net operating income ........ $ 60,000
The company produced and sold 120,000 kilograms of product during the month. There were no beginning or ending inventories.
Required:
• Given the present situation, compute
o The break-even sales in kilograms.
o The break-even sales in dollars.
o The sales in kilograms that would be required to produce net operating income of $90,000.
o The margin of safety in dollars.
• An important part of processing is performed by a machine that is currently being leased for $20,000 per month. Belli-Pitt has been offered an arrangement whereby it would pay $0.10 royalty per kilogram processed by the machine rather than the monthly lease.
o Should the company choose the lease or the royalty plan?
o Under the royalty plan compute break-even point in kilograms.
o Under the royalty plan compute break-even point in dollars.
o Under the royalty plan determine the sales in kilograms that would be required to produce net operating income of $90,000.
Format your assignment according to the following formatting requirements:
o The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
o The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
o Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.