Cost Volume Profit Analysis

[yanjinz]

I happened to read your question, and I would like to answer it just for reference.
as far as I am concerned, the problem of your question lies in the figure of fixed cost for one unit, which is 500. Given all these conditions, we can calculate the profit per unit as
contribution per unit- fixed cost per unit = 8000-500=7500, so how could it be that profit for one unit is 300? if you want get the figure of 300 for profit per unit, the fixed cost per unit should be 7500(8000-300), instead of 500 per unit.
total fixed cost remains unchanged with the changing of production/sales volume within a certain relevant range, and fixed cost per unit changes as the volume changes. Therefore, total fixed costs ,instead of fixed cost per unit,should be given if your want to work out the sales volume for a desired profit. formulation is as follows
CVP= total fixed costs/( contribution per unit - desired profit per unit)


<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by ez2xs</i>
<br />Dear Sam,
Thank you for your prompt reply. dear kindly check this example and tell me whether im doing right or wrong?
we have these figures
->Sale price of one unit=1000
->Fixed Cost for one unit=500
->variable Cost for one unit=200
->Contribution as per Massod=1000-200=8000
and we desire that one unit give us Rs=300 profit
CVP=(total fixed costs + desired level of profit)/contribution per unit of production.=???
CVP=1.00
how can we analyse???

Thanks & Regards,

Tariq!!!

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shelly