Question

Carta Vista Coporation has collected the following information after its hrst year of sales Sales were 51.770 .000 on 118.000 units. 5318.600(20) variable and b0ss fixedk and manafacturing overhead 3413.000 (70) variable and 00 si foed). Top management has asked you to do a CVP analvis so that it can make plans for the comins year. it has propected that unit sales will increane by 105 sext yest, Compute the contribution margin foy he current year and the projected year and the fued costs for the current year. (Assume that fioed conts will remain the same in the projected yeard)

Answer 1

The contribution margin for the current year is $1,038,400, and for the projected year, it is $1,090,320. Fixed costs for the current year total $1,400,000.

Step-by-step explanation:

To conduct a Cost-Volume-Profit (CVP) analysis for Carta Vista Corporation, we need to calculate the contribution margin for both the current year and the projected year as well as determine the fixed costs for the current year. The contribution margin is calculated as sales minus variable costs. For the current year, the contribution margin is $1,770,000 (sales) - $318,600 (variable manufacturing costs) - $413,000 (variable overhead) = $1,038,400.

Projected unit sales are 118,000 units * 105% = 123,900 units. Assuming the same selling price per unit, projected sales will be $1,770,000 * 105% = $1,858,500. Variable costs would proportionally increase to $318,600 * 105% = $334,530 (manufacturing) and $413,000 * 105% = $433,650 (overhead), summing to $768,180. The projected contribution margin for next year would then be $1,858,500 - $768,180 = $1,090,320.

The fixed costs for the current year are the sum of fixed manufacturing costs and fixed overhead costs, which are $800,000 + $600,000 = $1,400,000.