8.13 CVP, changing revenues and costs. (20 min) 1 Soleil charges €1,000 per round-trip ticket. Hence, each ticket will yield only a €48 commission. USP = €48 UVC = €29 (€17 + €12) UCM = €19 FC = €22,000 a FC €22,000 = = UCM €19 Q = 1,158 tickets (rounded up) b FC + TOI €22,000 + €10,000 = = UCM €19 Q €32,000 €19 = = 1,685 tickets (rounded up) The reduced commission sizably increases the breakeven point and the number of tickets required to yield a target operating income of €10,000: 8% old commission Upper limit on commission of €48 Breakeven point 432 1,158 Attain OI 628 1,685 2 The €5 delivery fee can be treated as either an extra source of revenue (as done below) or a cost offset. Either approach increases UCM by €10: USP = €53 (€48 + €5) UVC = €29 (€17 + €12) UCM = €24 FC = €22,000 a FC €22,000 = = UCM €24 Q = 917 tickets (rounded up) b FC + TOI €22,000 + €10,000 = = UCM €24 Q €32,000 €19 = = 1,334 tickets (rounded up) The €5 delivery fee results in a higher contribution margin which reduces both the breakeven point and the tickets sold to attain operating income of €10,000.
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 Share with your friends: |