Name :

1. Rizzah Rahmaniah (20160420023)

2. Anissa Larasati (20160420139)
3. Fabio Bolanda S (20160420182)
4. Novita Rahmawati (20160420312)
Class : IPAcc I
EXERCISE
CHAPTER 11 COST – VOLUME – ANALYSIS:
A MANAGERIAL PLANNING TOOL
11.3 Break Even in Units
We see that for Lohrey Company, the price is $8 each, and the variable cost per unit is $5
($75,000/15,000 units). Fixed cost is $37,500.
1. Calculate break even number of units
𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡
𝑈𝑛𝑖𝑡𝑠 =
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛
$37,500 $37500
= =
($45000 ÷ 15000 𝑢𝑛𝑖𝑡𝑠) $3
= 12,500 𝑢𝑛𝑖𝑡𝑠
2. Prepare an income statement
Sales ($8 x 12,500 units) .................................................................. $ 100,000
Variable cost ($5 x 12,500 units) .................................................................. 62,500
Contribution Margin ....................................................................................... $ 37,500
Less: Fixed Cost ............................................................................................. 37,500
Operating Income ........................................................................................$ 0
3. How many units must Lohrey sell to earn operating income equal to $9,900
(𝑇𝑎𝑟𝑔𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 + 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡)
𝑈𝑛𝑖𝑡𝑠 =
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛
$37,500 + $9,900
=
$3
$47,400
= = 15,800 𝑢𝑛𝑖𝑡𝑠
$3
11.4 Contribution Margin Ratio;Variable Cost Ratio;Breakeven in Sales Revenue
1. Contribution margin per unit and Contribution margin ratio
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 = 𝑃𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡𝑠 − 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡𝑠
= $8 − $5 = $3
 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡𝑠
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜 =
𝑃𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡𝑠
$3
= = 0,375 𝑜𝑟 37.5%
$8
2. Variable cost ratio for Lohrey Company
𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡
𝑉𝑎𝑟𝑖𝑎𝑏𝑒𝑙 𝐶𝑜𝑠𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠
$75,000
= = 0,625 𝑜𝑟 62.5%
$120,000
3. Calculate break even revenue
𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝐵𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 =
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜
$37,500
= = $100,000
37.5%
4. How much revenue must Lohrey make to earn operating income equal to $9,900
(𝑇𝑎𝑟𝑔𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 + 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡)
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 =
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜
($37,500 + $9,900)
=
37,5%
$47,400
= = $126,400
37,5$
11.8 Multiple Product Breakeven;Breakeven Sales Revenue;Margin of Safety
1. What is Sales mix of videos and equipment sets
𝑆𝑎𝑙𝑒𝑠 𝑚𝑖𝑥 𝑉𝑖𝑑𝑒𝑜 ∶ 𝑆𝑎𝑙𝑒𝑠 𝑚𝑖𝑥 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝑆𝑒𝑡𝑠
10,000 𝑢𝑛𝑖𝑡𝑠 ∶ 5,000 𝑢𝑛𝑖𝑡𝑠
2∶1
All of divided by Equipment sets 5,000 units
2. Compute the breakeven quantity of each product
Unit
Unit Contribution Unit Sales Package Unit
Product Variable
Price Margin Sold Mix Contribution
Cost
Video $12 $4 $8 10,000 2 $ 16
Equipment Sets $15 $6 $9 5,000 1 $ 9
Package Total $ 25

𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡 $70,000

𝐵𝑟𝑒𝑎𝑘𝑒𝑣𝑒𝑛 𝑃𝑎𝑐𝑘𝑎𝑔𝑒𝑠 = =
𝑇𝑜𝑡𝑎𝑙 𝑃𝑎𝑐𝑘𝑎𝑔𝑒 $25
= 2,800 𝑢𝑛𝑖𝑡𝑠
𝐵𝑟𝑒𝑎𝑘𝑒𝑣𝑒𝑛 𝑉𝑖𝑑𝑒𝑜 = 𝑆𝑎𝑙𝑒𝑠 𝑀𝑖𝑥 𝑥 𝐵𝑟𝑒𝑎𝑘𝑣𝑒𝑛 𝑃𝑎𝑐𝑘𝑎𝑔𝑒𝑠
= 2 × 2,800 = 5,600 𝑢𝑛𝑖𝑡𝑠

𝐵𝑟𝑒𝑎𝑘𝑒𝑣𝑒𝑛 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝑆𝑒𝑡𝑠 = 𝑆𝑎𝑙𝑒𝑠 𝑀𝑖𝑥 𝑥 𝐵𝑟𝑒𝑎𝑘𝑣𝑒𝑛 𝑃𝑎𝑐𝑘𝑎𝑔𝑒𝑠

= 1 × 2,800 = 2,800 𝑢𝑛𝑖𝑡𝑠
 3. Prepare an income statement for Switzer for last year.
Switzer Company
Income Statement
For last year
Sales
[($12 x 10,000) + ($15 x 5,000)] ................................................................. $195,000
Less: Variable Cost
[($4 x 10,000) + ($6 x 5,000)] ..................................................................... 70,000
Contribution Margin ....................................................................................... $125,000
Less: Fixed Cost ............................................................................................. 70,000
Operating Income ........................................................................................ $ 55,000

𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜 =
𝑆𝑎𝑙𝑒𝑠
$125,000
= = 0,641 𝑜𝑟 64,1%
$195,000
𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝐵𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 =
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜
$70,000
= = $109,204
64,1%

11-11 CVP and Profit-Volume Graphs

1. CVP Graph
 CVP Graph
$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0
0 500 1000 1500 2000 2500 3000 3500

Total Revenue Total Cost

Revenue (+) : Price x Units

: $10 x Units

Total Cost (x) : (Unit variable cost x Units) + Fixed cost

: ($6 x Units) + $10,000

BEP : Operating Income = 0

Sales – VC – FC

0 : ($10 x Unit) – ($6 x Unit) - $10,000

$10,000 : Unit ($10 - $6)

$10,000
: Unit
$4

2,500 : Unit (BEP)

2. CVP Graphs
a. Fixed cost increase by $5000
 CVP Graph
$40,000

$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0
0 500 1000 1500 2000 2500 3000 3500 4000

Total Revenue Total Cost

Revenue (+) : Price x Units

: $10 x Units

Total Cost (x) : (Unit variable cost x Units) + Fixed cost

: ($6 x Units) + $15,000

BEP : Operating Income = 0

Sales – VC – FC

0 : ($10 x Unit) – ($6 x Unit) - $15,000

$15,000 : Unit ($10 - $6)

$15,000
: Unit
$4

3,750 : Unit (BEP)

b. Unit variable cost increase to $7

 CVP Graph
$50,000

$40,000

$30,000

$20,000

$10,000

$0
0 500 1000 1500 2000 2500 3000 3500 4000

Total Revenue Total Cost

Revenue (+) : Price x Units

: $10 x Units

Total Cost (x) : (Unit variable cost x Units) + Fixed cost

: ($7 x Units) + $10,000

BEP : Operating Income = 0

Sales – VC – FC

0 : ($10 x Unit) – ($7 x Unit) - $10,000

$10,000 : Unit ($10 - $7)

$10,000
: Unit
$3

3,333 : Unit (BEP)

c. Unit selling price increase to $12

 CVP Graph
$50,000

$40,000

$30,000

$20,000

$10,000

$0
0 500 1000 1500 2000 2500 3000 3500 4000

Total Revenue Total Cost

Revenue (+) : Price x Units

: $12 x Units

Total Cost (x) : (Unit variable cost x Units) + Fixed cost

: ($6 x Units) + $10,000

BEP : Operating Income = 0

Sales – VC – FC

0 : ($12 x Unit) – ($6 x Unit) - $10,000

$10,000 : Unit ($12 - $6)

$10,000
: Unit
$6

1,667 : Unit (BEP)

d. Fixed cost increase by $5,000 and unit variable cost is $7

 CVP Graph
$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0
0 1000 2000 3000 4000 5000 6000 7000 8000

Total Revenue Total Cost

Revenue (+) : Price x Units

: $10 x Units

Total Cost (x) : (Unit variable cost x Units) + Fixed cost

: ($7 x Units) + $15,000

BEP : Operating Income = 0

Sales – VC – FC

0 : ($10 x Unit) – ($7 x Unit) - $15,000

$15,000 : Unit ($10 - $7)

$15,000
: Unit
$3

5,000 : Unit (BEP)

3. Profit-Volume Graph – Original Data

CVP Graph
$10,000
$8,000
$6,000
$4,000
$2,000
$0
-$2,000 0 500 1000 1500 2000 2500 3000 3500 4000
-$4,000
-$6,000
-$8,000
-$10,000

Total Cost

Operating Income (x) : (Price  Units) – (Unit VC  Units) – Fixed Cost

0 : ($ 10  Units)  ($ 6  Units)  $ 10.000

: ($ 4  Units)  $ 10.000

: 2500 Units
a. Fixed Cost Increase by $ 5000

CVP Graph
$15,000

$10,000

$5,000

$0
0 500 1000 1500 2000 2500 3000 3500 4000
-$5,000

-$10,000

-$15,000

Total Cost

Operating Income (x) = (Price  Units) – (Unit VC  Units) – Fixed Cost

0 = ($ 10  Units)  ($ 6  Units)  $ 15.000
= ($ 4  Units)  $ 15.000
= 3750 Units
b. Unit Variable Cost Increase to $ 7

CVP Graph
$10,000
$8,000
$6,000
$4,000
$2,000
$0
-$2,000 0 500 1000 1500 2000 2500 3000 3500 4000
-$4,000
-$6,000
-$8,000
-$10,000

Total Cost

Operating Income (x) = (Price  Units) – (Unit VC  Units) – Fixed Cost

0 = ($ 10  Units)  ($ 7  Units)  $ 10.000
= ($ 3  Units)  $ 10.000
= 3333 Units
c. Unit Selling Price Increase to $ 12

CVP Graph
$10,000
$8,000
$6,000
$4,000
$2,000
$0
-$2,000 0 500 1000 1500 2000 2500 3000 3500 4000
-$4,000
-$6,000
-$8,000
-$10,000

Total Cost

Operating Income (x) : (Price  Units) – (Unit VC  Units) – Fixed Cost

0 : ($ 12  Units)  ($ 6  Units)  $ 10.000

: ($ 6  Units)  $ 10.000

: 1667 Units
 d. Assume that Fixed Costs Increase by $ 5000 and Unit Variable Cost is $ 7

CVP Graph
$15,000

$10,000

$5,000

$0
0 1000 2000 3000 4000 5000 6000 7000 8000
-$5,000

-$10,000

-$15,000

Total Cost

Operating Income (x) = (Price  Units) – (Unit VC  Units) – Fixed Cost

0 = ($ 10  Units)  ($ 7  Units)  $ 15.000
= ($ 3  Units)  $ 15.000
= 5000 Units

4. The first set of graphs is more informative since these graphs reveal how costs change as sales
volume changes.

11-21

1. Unit contribution margin = $ 825,000 / $110,000 = $7.50

Break even point = $495,000/ 7.50 = 66,000 units
Contribution margin ratio = $7.50/$25 = 0,30
Break even point = $495,000/ 0.30 = $1,650,00
2. Sales ($126,000 x $25 ). $3150,000
Variable expense ( $126,000 x $17,5). 2205,000
Contribution margin $. 945,000
Fixed expense. 535,000
410,000

3. Target Sales = FC. + Target Operating Income

CM Ratio
315,000 = 535,000 + Target operating
0,3
Profit
4. (2750,000+ 315,000 ) = FC. + Target Operating Income
CM Ratio
3 065 000 = 535,000 + Target operating
0,3
9195000. = 535,000 + income