The assumptions that are made in CVP analysis includes the following:
- costs can be classified as variable or fixed.
- costs are linear within the relevant range.
- constant fixed cost per unit.
<h3>What is CVP analysis?</h3>
Cost Volume Profit analysis is the type of analysis that has to do with the cost accounting. This type of analysis is one that takes the impact of the various costs and volume on profit.
It helps to check how the changes that occur in the variable and the fixed cost affect profit.
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<span>The target
selling price per unit is $0.77, According the accounting books I have search,using
this solution: ($168,000 divided by 400,000) + $0.35= $0.77.Target costing is
an approach in most company to know a product’s life cycle cost in which it is
sufficient to develop specified functionality and quality.</span>
Answer:
It will be sold at $1,186.71
Explanation:
We will calculate the present value of the cuopon payment and the maturity at the new market rate of 7%
<u>The coupon payment will be calcualte as the PV of ordinary annuity</u>
C $50 (1,000 x 10%/2 as there are 2 payment per year)
time 16 (8 years x 2 payment per year)
rate 0.035 (7% rate / 2 payment per year)
PV $604.7058
<u>The maturity will be calculate as the PV of a lump sum</u>
Maturity 1,000.00
time 8 years
rate 0.07
PV 582.01
<u>The market price will be the sum of both:</u>
PV cuopon $604.7058
PV maturity $582.0091
Total $1,186.7149
<span>Well, your costs per title have decreased from:
$780/7 = $111.43
to:
$1080/12 = $90
That represents a decrease in costs of almost 20%.
Then. taking the change in titles processed per dollar of cost (the reciprocals of previous calculations), means that total productivity has increased by around 23.8%. Are you calculating labor productivity as including overhead? Because then the answer is 23.8%.</span>
