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  • Jul 12, 2007, 04:18 PM
    coledebbie
    CVP analysis
    c-v-p analysis

    The last outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop,sells hand-woven blankets for an average price $30 per blanket. Kerry buys the blankets from weavers at an average cost of $21. In addition, he has selling expenses of $3 per blanket. Kerry rents the building for $300 per month and pays one employee a fixed salary of $500 per month.

    1. Determined the number of blankets Kerry must sell to break even

    2. Determine the number of blankets Kerry must sell to generate a profit of $1000 per month

    3. Assume that Kerry can produce and sell his own blankets at a total variable cost of $16 per blanket, but that he would noeed to hire one additional employee at a monthly salary of $600

    a. determined the number of blankets Kerry must sell to break even

    b. determined the number of blankets Kerry must sell to generate a profit of $1000 per month
  • Aug 18, 2007, 06:00 PM
    grr82bntx
    Quote:

    Originally Posted by coledebbie
    c-v-p analysis

    The last outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop,sells hand-woven blankets for an average price $30 per blanket. Kerry buys the blankets from weavers at an average cost of $21. In addition, he has selling expenses of $3 per blanket. Kerry rents the building for $300 per month and pays one employee a fixed salary of $500 per month.

    1. Determined the number of blankets Kerry must sell to break even

    2. Determine the number of blankets Kerry must sell to generate a profit of $1000 per month

    3. Assume that Kerry can produce and sell his own blankets at a total variable cost of $16 per blanket, but that he would noeed to hire one additional employee at a monthly salary of $600

    a. determined the number of blankets Kerry must sell to break even

    b. determined the number of blankets Kerry must sell to generate a profit of $1000 per month

    1. Determine the number of blankets Kerry must sell to break even.
    (Sales price x Units) - (Variable cost x Units) - Fixed costs = $0
    $30X - $24X - $800 = $0
    $6X - $800
    X = $800/6 = 133.33
    X = 134
    2. Determine the number of blankets Kerry must sell to generate a profit of $1,000 per month.
    (Sales price x Units) - (Variable cost x Units) - Fixed costs = $1000
    $30X - $24X - $800 = $1000
    $6X = $1800
    X = 300
    3. Assume that Kerry can produce and sell his own blankets at a total variable cost of $16 per blanket, but that he would need to hire one additional employee at a monthly salary of $600.
    a. Determine the number of blankets Kerry must sell to break even.
    (Sales price x Units) - (Variable cost x Units) - Fixed costs = $0
    $30X - $16X - $1400 = $0
    $14X - $1400
    X = $1400/14 = 100
    X = 100
    b. Determine the number of blankets Kerry must sell to generate a profit of $1,000 per month.
    (Sales price x Units) - (Variable cost x Units) - Fixed costs = $1000
    $30X - $16X - $1400 = $1000
    $14X = $2400
    X = 172

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