Problem 3: Mestlé Company (CVP) Mestlé Company makes and sells teacups. Below are some per unit...

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Problem 3: Mestlé Company (CVP) Mestlé Company makes and sells teacups. Below are some per unit estimates gathered by the man

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Answer 1

Answer #1

Given

fixed expenses = (16000*1.4)+16000*(2.8)

=67200

selling price per unit= 27

variable cost per unit = 10.4+0.6 = 11

Contribution per unit = sale price – variable cost

= 27-11

= 16

contribution margin ratio = ( contribution / sales )*100

= (16/27) *100 = 59.26%

1 breakeven

in units = fixed cost / contribution per unit = 67200/16 = 4200 cups

b)

Units to be sold to earn required profit = (fixed cost + required profit ) / contribution per unit

= ( 67200+170000)/16

= 14825 cups

if a company sells 14825 then it will have a ability to reach 170000 operating profit

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Answer 2

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Problem 3: Mestlé Company (CVP) Mestlé Company makes and sells teacups. Below are some per unit...

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