Sheet1Case#4: CVP Analysis ProblemThe Little Jewelry Box Company makes and sells jewelry boxesto various retailers. Please note the following information.

Projected Sales (Units per Month)14,000Average Sale Price per Unit$70Average Variable Cost per Unit$50Fixed Operating Costs per Month: Administrative salaries and wages$80,000 Marketing/Advertising costs$40,000

Using the above information, determine the following:a. Compute the total of Fixed Costs. Administrative salaries and wages$80,000 Marketing/Advertising costs$40,000Total Fixed Cost$120,000

b. Compute the contribution margin per unit.Average Sale Price per Unit$70Average Variable Cost per Unit$50Contribution Margin per unit$20c. Compute the contribution margin percentage (CMR).Contribution Margin per unit$20Average Sale Price per Unit$70Contribution Margin percentage (CMR)28.57%d. Prepare a budgeted CM Income Statement for the first month of the year based upon projected unit sales.Sale revenue$980,000Less: Variable Cost$(700,000)Contribution Margin$280,000Less: Fixed Expenses$(120,000)Net Income$160,000e. Compute the Break Even number of units.Total Fixed Expenses$120,000Contribution Margin per unit$20Breakeven point (units) = Total Fixed Expenses / CM per unitBreakeven Point (unit)6,000f. Compute the Break Even sales (in dollars) (also computeusing CMR).Total Fixed Expenses$120,000Contribution Margin Ratio (CRM)28.57%Breakeven point (units) = Total Fixed Expenses / CM RatioBreakeven Point (sales)$420,000g. If Targeted Operating Income were $80,000, how many unitswould need to be sold.Total Fixed Expenses$120,000Targeted operating income$80,000Contribution Margin per unit$20Breakeven point (units) = (Total Fixed Expenses + Targeted operating income) / CM per unitBreakeven Point (unit)10,000

h. Prepare a CM Income Statement if projected unit sales were10% greater than the current budget.Sale revenue$1,078,000Less: Variable Cost$(770,000)Contribution Margin$308,000Less: Fixed Expenses$(120,000)Net Income$188,000i. If the current sales price of the jewelry box needs to bedecreased by 5% to increase sales, calculate the CM, OI, andthe number of BE units that need to be sold.(Use the same number of units found in question "h")New Sale price per unit$66.50Less: Average Variable Cost per Unit$50.00New CM$16.50New OI$134,100New Breakeven Point (units)7,273j. If advertising costs must be increased by $5,000 to effectthe 10% increase in unit sales, determine the revised BE unitsand BE sales in dollars.(Use the same number of units found in question "h")New Fixed Cost$125,000Contribution Margin per unit$20Contribution Margin Ratio28.57%Revised BE sale units6,250Revised BE sale (dollars)$437,500k. Prior to decreasing the sales price and increasing ad costs,the company noted VC would increase by 5%. Using the original sales price and FC, calculate the new CM, CMR,revised OI, BE units, and BE sales.Average Sale Price per Unit$70.00Less: New Variable Cost per unit$(52.50)New CM Per unit$17.50New CMR25.00%Revised OI$125,000BE Units6,857BE Sales$480,000