1. How can sensitivity analysis be used in conjunction with CVP analysis?
2. Why is a declining margin of safety over a period of time an issue of concern to managers?
3. VARIABLE COST, FIXED COST, CONTRIBUTION MARGIN INCOME STATEMENT
Head-First Company plans to sell 5,000 bicycle helmets at $70 each in the coming year. Product costs include:
|
Direct material per helmet
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$ 30
|
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Direct labor per helmet
|
5
|
|
Variable overhead per helmet
|
12
|
|
Total fixed factory overhead
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14,000
|
Variable selling expense is a commission of $2 per helmet; fixed selling and administrative expense totals $15,400.