Problem 1: CVP analysis:
SND, Inc., had the following result for last year:
|
|
Total
|
Per unit
|
|
Sales revenue
|
$2,000,000
|
$20.00
|
|
Variable expenses
|
1,250,000
|
12.50
|
|
Contribution margin1
|
75,000
|
$7.50
|
|
Fixed expenses
|
400,000
|
|
|
Operating income
|
$350,000
|
|
|
|
|
|
Prepare a new income statement for each of the following scenarios. Consider each scenario independently.
Required:
a. Sales volume decreases by 10%.
b. The sales price increases by 5%.
c. Variable costs per unit increase by $1.50.
d. The sales price decreases to $18, and an additional 5,000 units are sold.
e. A new advertising campaign costing $75,000 increases sales volume by 15%.
f. Variable costs per unit increase by $2.00, the sales price per unit increases by $1.50, sales volume decreases by 2,500 units, and fixed expenses increase by $20,000.