Question - Impact on breakeven point if sale price, variable costs, and fixed costs change

Dependable Drivers Driving School charges $250 per student to prepare and administer written and driving tests. Variable costs of $100 per student include trainers' wages, study material, and gasoline. Annual fixed costs of $75,000 include the training facility and fleet of cars.

Requirements -

1. For each of the following independent situation, calculate the contribution margin per unit and the breakeven point in units by first referring to the original data provided:

a. Breakeven point with no change in information

b. Decrease sales price to $220 per student

c. Decrease variable costs to $50 per student

d. Decrease fixed costs to $60,000

2. Compare the impact of changes in the sales price, variable costs, and fixed costs on the contribution margin per unit and the break point in units.

Question - Kincaid Company sells flags with team logos. Kincaid has fixed costs of $583,200 per year plus variable costs of $4.80 per flag sells for $12.00

Requirements

1. Use the income statement equation approach to compute the number of flags Kincaid must sell each year to break even.

2. Use the combination margin ratio CVP formula to complete the dollar sales Kincaid needs to earn $33,000 in operating income in 2012. (Round the contribution margin to two decimal places.)