IVANHOECOMPANY
CVP Income Statement
For the Month Ended April 30, 2025
Total
Per Unit
Percent of Sales
Sales (3,870 units)
$387,000
$100
100 %
Variable costs
232,200
60
60
Contribution margin
154,800
$40
40 %
Fixed expenses
129,000
Net income
$25,800
Management is considering the following course of action to increase net income: Reduce the unit selling price by 4%, with no changes
to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%.
Using the contribution margin technique, compute the break-even point in sales units and sales dollars and margin of safety in dollars:
(Round intermediate calculations to 4 decimal places e.g. 0.2522 and final answer to 0 decimal places, e.g. 2,510.)
(a) Assuming no changes to unit selling price or costs.
Break-even point
3,225
units
Break-even point
$
322,500
Margin of safety
$
64,500
(b1) Assuming changes to unit selling price and volume as described above.
