COST-VOLUME RELATIONSHIPS

Cost-Volume Relationships

Cost-Volume Relationships

Monthly Breakeven point (Units)

Contribution Margin in Units= Total Fixed Costs/Contribution Margin per Unit

Contribution Margin in Units= 5,000/0.20

Contribution Margin in Units= 25,000 units

Monthly Breakeven point ($Sales)

Contribution Margin in Dollar Sales= Contribution Margin in Units x Selling Price Contribution Margin in Dollar Sales= 25,000 x 1.00

Contribution Margin in Dollar Sales= $25,000

Net Income at Sales of 36,000 units

Sales (1.00 x 36,000)

$36,000

Less: Variable Costs

Cost of Snacks (0.80 x 36,000)

$28,800

Contribution Margin

$7,200

Less: Fixed Costs

Machine rental (40 x 43.50)

$1,740

Space rental (40 x 28.80)

$1,152

Part-time wages (Servicing 40 additional Machines)

$1,908

Other fixed costs

$200

Total Fixed Costs

$5,000

Profit

$2,200

Monthly Breakeven point (Units-Doubled Space Rental Cost)

Current Space Rent Cost=$1,152

New Cost (1,152 x 2)= ...