Proposal of Selling by ssz16336

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									               Chapter 2 Decision Guideline
                        Phonetronix
Cost-Volume-Profit (CVP) Analysis
                          8/13/2010


                             Proposal A Proposal B Proposal C
Selling price                       $99       $129       $99
Variable cost                       $55        $55       $49
Contribution margin                 $44        $74       $50
Contribution margin ratio        44.44%     57.36%    50.51%

Fixed Cost                      $110,000     $110,000 $110,000

Break even in units                2,500         1,486      2,200

Break even in dollars           $247,500     $191,757 $217,800


Answers:

1. Proposal A : Break even point in units 2500 and in dollars $247500
2. Proposal B: Increase in selling price reduced the breakeven point to 1486 as compared to proposal A
3. Proposal C: Change in variable cost did not impact so much on break even since selling price was also reduced
to proposal A
 price was also reduced

								
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