Assignment Bill French
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8/14/2019 Assignment Bill French
1/5
Aggregrate A B
Sales at Full capacity (units) 2000000
actual sales volume (units) 1500000 600000 400000
unit sale price($) 1.2 1.67 1.5
Total sales revenue($) 1800000 999999.96 600000Variable cost per unit($) 0.75 1.25 0.625
Total variable cost($) 1125000 750000 250000
Fixed costs($) 520000 170000 275000
Net profit($) 155000 80000 75000
Ratios:
Variable Cost to sales 0.63 0.75000003 0.42
Variable income to sales 0.37 0.24999997 0.58
Utilization of capacity(%) 75% 30% 20%
Contribution Margin 0.45 0.42 0.88
Break even point 1155556 404762 312500
Q2 Sales Volume of C increase by 450000 units
Sales Price of C increase by 100%
Fixed Cost increases by $ 10000 per month
A sales becomes 2/3
a)
Aggregrate A B
Sales at Full capacity (units) 2000000actual sales volume (units) 1750000 400000 400000
unit sale price($) 1.158 1.67 1.5
Total sales revenue($) 2026667 666667 600000
Variable cost per unit($) 0.56 1.25 0.625
Total variable cost($) 987500 500000 250000
Fixed costs($) 640000 170000 275000
Net profit($) 399167 -3333 75000
Ratios:
Variable Cost to sales 0.49 0.76 0.42
Variable income to sales 0.51 0.24 0.58
Utilization of capacity(%) 88% 20% 20%Contribution Margin 0.59 0.42 0.88
Break even point 1077787.00 408001.00 314286.00
b) Profit ($) 25000
Dividends ($) 50000
Extra Dividends ($) 25000
Income After Tax ($) 100000
Product Lines
Product Lines
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8/14/2019 Assignment Bill French
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Selling Price per unit ($) 1.158
Variable Cost per unit ($) 0.56
Contribution Margin per unit ($) 0.59
Income Before Tax ($) 200000
Total Fixed Cost ($) 840000
No. of Units to Be produced 1414595
c)
Aggregrate A B
Sales at Full capacity (units) 2000000
actual sales volume (units) 1750000 400000 400000
unit sale price($) 1.158 1.67 1.5
Total sales revenue($) 2026667 666667 600000
Variable cost per unit($) 0.61 0.264 0.641667
Total variable cost($) 1072866.67 105600 256666.7
c) Profit ($) 25000
Dividends ($) 50000
Income After Tax ($) 75000
Selling Price per unit ($) 1.158
Variable Cost per unit ($) 0.61
Contribution Margin per unit ($) 0.55
Income Before Tax ($) 150000
Total Fixed Cost ($) 790000
No. of Units to Be produced 1449465
d) Profit ($) 25000
Dividends ($) 50000
Extra Dividends ($) 25000
Income After Tax ($) 100000
Selling Price per unit ($) 1.158
Variable Cost per unit ($) 0.61
Contribution Margin per unit ($) 0.55
Income Before Tax ($) 200000
Total Fixed Cost ($) 840000
No. of Units to Be produced 1541204
Q3
Product Lines
Yes break even analysis can help in deciding if company should
alter the existing product emphasis by checking which all
products are giving least contribution margin to cover their
fixed cost
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8/14/2019 Assignment Bill French
3/5
No. of units produced of C 950000
Sales Price ($) 0.8
Sales Revenue ($) 760000
Variable cost ($) 0.25
Total Variable Cost ($) 190000
Contribution Margin ($) 0.55
Fixed Cost ($) 195000Investment that can be done ($) 375000
Q4
The break even analysis helps understand and formulate the
relationship between costs (fixed and variable), output and
profit. The technique can be used to set sales targets and/or
prices to generate target profits. In a wide product range, the
analysis helps to find out which products are performing well
and which are leading to losses
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8/14/2019 Assignment Bill French
4/5
C
500000
0.4
2000000.25
125000
75000
0
0.625
0.38
25%
0.15
500000
C
950000
0.8
760000
0.25
237500
195000
327500
0.32
0.68
48%0.55
354546.00
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8/14/2019 Assignment Bill French
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C
950000
0.8
760000
0.748
710600
