Cost Volume Profit Analysis for The Hampshire Company: A

School: Southern New Hampshire University - Course: ACC 550 - Subject: Accounting

Milestone 1 Cost Volume Profit Analysis By: Maria Sciappi SNHU - Cost Accounting 1

The Hampshire Company A Cost Volume Profit Analysis (CVP) examines the impact on operating profit of different amounts of volume and costs. This helps to determine a break-even point for cost structures based on different sales growth to assist managers in making short-term economic decisions. This helps in properly understanding the relationship between profits and costs on one side, and volume on the other side. The CVP Analysis is beneficial when creating budget estimates that demonstrate costs at different levels of activity. This is also valuable when a company is attempting to figure out the number of sales to reach a targeted income. Cost Volume Profit Analysis for The Hampshire Company Requirement 1 UnitsPriceTotals Sales60,000$12.50$750,000.00 Variable Costs60,000$6.00$360,000.00 Fixed Costs$295,525.00 Net Income$94,475.00 Requirement 2 Contribution Margin per Unit in Dollars = Selling Price - Variable Costs Selling PriceVariable CostsContribution Margin per Unit $12.50$6.00$6.50 Contribution Margin Ratio = Contribution Margin/Selling Price Contribution MarginSelling PriceContribution Margin Ratio $6.50$12.5052% Requirement 3 Break-Even Point = Fixed Costs / Contribution Margin