Sensitivity Analysis
Essay by beverley Richards • March 2, 2016 • Coursework • 2,040 Words (9 Pages) • 1,226 Views
Monthly operating profit when sales total $360,000
Total Sales Revenue = 360,000
Less Total Variable Exp. = 240,000
Contribution Margin = 120,000
Less Total Fixed Costs = 60,000
Operating Profit 60,000
2. Break-even number in units
BEP = Fixed Cost
Unit Contribution Margin
= 60,000 = 60,000 = 2000 units
90 – 60 30
3. Number of units sold that would produce an operating profit of $120,000.
(N x SP per unit) – (N x MC per unit) – Fixed Costs = Net Profit
(N x 90) – (N x 60) – 60,000 = 120,000
90 N – 60 N – 60,000 = 120,000
30 N = 120,000 + 60,000
30 N = 180,000
N = 6000
5. Number of units sold in March
Total Sales = no. of units x SP per unit
360,000 = N x 90
360,000 = 90 N
N = 4000 units
6. Number of units sold that would produce an operating profit of 40 percent of sales dollars
(N x SP per unit) – (N x MC per unit) – Fixed Costs = Net Profit
90N - 60 N - 60,000 = 40%
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