The Little Jewelry Box Company_CVP Analysis

The Little Jewelry Box Company makes and sells jewelry boxes
to various retailers. Please note the following information.

Projected Sales (Units per Month)	14,000
Average Sale Price per Unit	$ 70
Average Variable Cost per Unit	$ 50
Fixed Operating Costs per Month:
Administrative salaries and wages	$ 80,000
Marketing/Advertising costs	$ 40,000


Using the above information, determine the following:

a. Compute the total of Fixed Costs.

b. Compute the contribution margin per unit.

c. Compute the contribution margin percentage (CMR).

d. Prepare a budgeted CM Income Statement for the first
month of the year based upon projected unit sales.

e. Compute the Break Even number of units.

f. Compute the Break Even sales (in dollars) (also compute
using CMR).

g. If Targeted Operating Income were $80,000, how many units
would need to be sold.

h. Prepare a CM Income Statement if projected unit sales were
10% greater than the current budget.

i. If the current sales price of the jewelry box needs to be
decreased by 5% to increase sales, calculate the CM, OI, and
the number of BE units that need to be sold.
(Use the same number of units found in question "h")

j. If advertising costs must be increased by $5,000 to effect
the 10% increase in unit sales, determine the revised BE units
and BE sales in dollars.
(Use the same number of units found in question "h")

k. Prior to decreasing the sales price and increasing ad costs,
the company noted VC would increase by 5%. Using the
original sales price and FC, calculate the new CM, CMR,
revised OI, BE units, and BE sales.

11 years ago

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