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sales 36750000, cost of goods variable 13300000 fixed 9300000, commissions 4410000, fixed marketing 1350000, fixed administrative 6000000, model 101 annual sales volume 16000, unit sale price 650 variable expense per unit 250, model 201 annual sales volume 19000 unit sale price 750 variable expense per unit 200, model 301 annual sales volume 11000 unit sale price 1100 variable expense per unit 500

10/8/2019 Assignment 8: Cost Volume Profit Analysis (Note: Each of the following questions is independent of the others) 1. What is Mirabel's over-all break-even point in sales dollars? 2. Assume that sales revenue remains constant, what is the impact on break-even and the margin of safety if Paul takes Mary Jane's advice and increases sales commission to 15%? 3. If Mirabel purchases the new equipment for $1,200,000, it will increase fixed costs by 10% but will decrease the variable cost per unit for all 3 models by 5%. What will Mirabel's new break-even point be? 4. If Mirabel invests the additional $650,000 in fixed marketing expenses, sales of the Model 301 are expected to increase by 8%. What is the break-even and margin of safety under these circumstances? 5. If the projection is that sales will increase by 10% in the coming year, can the company afford to also increase commission from 12% to 15%? Why or why not. 6. Assume that sales volume remains fixed but there is a 5% increase in variable expenses (materials cost), for the Model 101 and 301, and a 10% increase in variable expenses for Model 201. What is the new break-even? 14

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