CVP analysis with step costs.Sparkle Company has one product: printing t-shirts with logos for various businesses.The sales price of $20 remains constant per unit regardless of volume,as does the variable cost of $12 per unit.The company is considering operating at one of the following three monthly levels of operations:

Required:
a.Calculate the break-even point(s)in units.
b.If the company can sell everything it makes,should it operate at level 1,level 2,or level 3? Support your answer.

Question

CVP analysis with step costs.Sparkle Company has one product: printing t-shirts with logos for various businesses.The sales price of $20 remains constant per unit regardless of volume,as does the variable cost of $12 per unit.The company is considering operating at one of the following three monthly levels of operations:
  
Required:
a.Calculate the break-even point(s)in units.
b.If the company can sell everything it makes,should it operate at level 1,level 2,or level 3? Support your answer.

Quizplus · Accepted Answer

The Answer of CVP analysis with step costs.Sparkle Company has one product: printing t-shirts with logos for various businesses.The sales price of $20 remains constant per unit regardless of volume,as does the variable cost of $12 per unit.The company is considering operating at one of the following three monthly levels of operations:
  
Required:
a.Calculate the break-even point(s)in units.
b.If the company can sell everything it makes,should it operate at level 1,level 2,or level 3? Support your answer.

CVP Analysis with Step Costs