Option #2: Comparative Cost-Volume-Profit Analysis Calculation
Phil Lesley, Controller, would like to complete a comparative cost-volume-profit analysis for the current year over the prior year for the chewing gum manufacturing plant to determine if the breakeven point was achieved, and how it may have differed between the two years.
Specific costs for production of 400,000 units each year, include the following:
2017 – Current Year
Chewing Gum Manufacturing Division Costs
Variable Costs Total
Fixed Costs Total
Raw materials
$ 250,000
Direct manufacturing labor
$ 110,000
Indirect manufacturing labor
$ 42,500
Factory Insurance & Utilities
$ 35,000
Depreciation Machinery and factory
$ 48,500
Repairs and maintenance factory
$ 8,000
Selling, marketing, and distribution expenses
$ 10,000
$ 30,000
General and administrative expenses
$ 50,000
2016 – Prior Year
Chewing Gum Manufacturing Division Costs
Variable Costs Total
Fixed Costs Total
Raw materials
$ 245,000
Direct manufacturing labor
$ 105,000
Indirect manufacturing labor
$ 50,250
Factory Insurance & Utilities
$ 33,750
Depreciation Machinery and factory
$ 38,500
Repairs and maintenance factory
$ 14,000
Selling, marketing, and distribution expenses
$ 10,000
$ 25,000
General and administrative expenses
$ 60,000
There is no beginning or ending inventories. The total sales for 400,000 units produced are $1,050,000 for 2016 and $1,200,000 for 2017.
Using Microsoft Excel, answer the following questions for each year given the fact pattern above, showing all supporting calculations and labelling answers clearly. Please refer to CSU-Global Library (Links to an external site.)Links to an external site. for Lynda.com tutorials on using Microsoft Excel or use the Excel Tutorials link found in the classroom if you need assistance.
What is the contribution margin per unit for each multipack of gum produced given the fact pattern above?
What is the breakeven point in units and dollars given the fact pattern above?
What is the division’s margin of safety and degree of operating leverage given the fact pattern above?
Create a very simple Excel table summarizing answers of each computation for each year. *Below the table in Excel, please write at least 3 observations you have regarding the data comparisons/contrasts.
Responses should be in complete sentences utilizing proper grammar. Your paper must be formatted according to CSU-Global Guide to Writing and APA Requirements (Links to an external site.)Links to an external site..
