Course project

2.xlsx

Sheet1

			Module 02 Course Project – CVP and Break-Even Analysis
Ingredients	Classification of cost
Butter	Variable
Sugar	Variable
Brown Sugar	Variable
Eggs	Variable
Milk	Variable
Vanilla Extract	Variable
Flower	Variable
Baking Powder	Variable
Salt	Variable
Chocolate chips	Variable
All ingredients are variable cost because the total costs of the ingredients changes with the level of output or needed to make the cookies changes in direct proportion to the amount of cookies produced.
Overhead		Clasification of cost
Indirect labor(salaries)		Fixead
Insurance		Fixead
Utilities		Fixead
Employee benefits		Fixead
Depreciation equipment		Fixead
Rent		Fixead
Property taxes		Fixead

Particulars	Units	Amount
Production at highest level	1866	$230
Production at low level	996	$182
Variable Cost per Unit = Difference in Cost/Difference in units			0.0551724138

	Income Statement
Particulars		Amount
Sales Revenue Assumed(600 units@10)		$6,000
Less variable cost:
Manufacturing cost:40% of sales $2400
Selling and admin:20% of sales $1200		$3,600
Contribution Margin		$2,400
Less Fixed Cost (assumed)		$2,000
Net operating income		$400
Contribution margin Ratio= Contribution margin/sales = 40%

	Break Even point units = Fixed cost/contribution margin per unit = 2000/5 = 500 units
	Particulars				Amount
	Fixead cost				$2,000
	Desired profit				$1,000
	Total				$3,000
	Contribution margin per unit (10-4-2) $4
	Target selling units				$750
	Yes it seems realistic since 600 units is being alredy sold. It is just 25% increase in existing selling units.