Toby wants to perform some CVP analysis on fertilizing jobs. Onone job, she used 40 pounds of fertilizer that she bought in bulk($1,000 for 2,000 pounds). It took her employee 1.5 hours to spreadthe fertilizer (she is paid $15/hour) with the motorized spreader.Toby paid $4,000 for the spreader three years ago and it isestimated to last 10 years. To get to the job site, a company truckand trailer was used (cost: $40,000 expected to last 10 years).This was the only use of the truck and trailer that day. Additionalemployee costs include 10% payroll tax and $730 per year inworkerâs compensation insurance. You may assume an employee works2,000 hours per year on various tasks (not exclusively onfertilizing). Toby currently charges her customers $2.12 per poundto spread fertilizer.
Toby has collected some cost data over the past year (costs andpounds of fertilizer spread by month â per the table below).
1) Use account analysis to estimate variable and fixed costs tocomplete the analysis.
2) Use regression to estimate variable and fixed costs tocomplete the analysis.
3) Use calculations done by formula within Excel (including cellreferences).
4) Separate and label the parts of the calculation as Variablecosts (VC), Contribution Margin (CM), Fixed Cost (FC) as annualbreakeven (BE) point for fertilizer (in pounds) is calculated.
5) How many pounds must be spread to earn a target profit of$1,000?
6) What is the margin of safety on that target profit?
7) How many pounds must be sold (spread) if Toby wants a marginof safety of 10% of sales?
8) Is there any additional information that can be made whenmaking these calculations?
Month Units Costs Jan 200 5360 Feb 150 5408 Mar 250 5510 Apr 450 5704 May 350 5550 Jun 300 5405 Jul 200 5305 Aug 250 5509 Sep 375 5458 Oct 425 5700 Nov 175 5300 Dec 100 5250
Toby wants to perform some CVP analysis on fertilizing jobs. Onone job, she used 40 pounds of fertilizer that she bought in bulk($1,000 for 2,000 pounds). It took her employee 1.5 hours to spreadthe fertilizer (she is paid $15/hour) with the motorized spreader.Toby paid $4,000 for the spreader three years ago and it isestimated to last 10 years. To get to the job site, a company truckand trailer was used (cost: $40,000 expected to last 10 years).This was the only use of the truck and trailer that day. Additionalemployee costs include 10% payroll tax and $730 per year inworkerâs compensation insurance. You may assume an employee works2,000 hours per year on various tasks (not exclusively onfertilizing). Toby currently charges her customers $2.12 per poundto spread fertilizer.
Toby has collected some cost data over the past year (costs andpounds of fertilizer spread by month â per the table below).
1) Use account analysis to estimate variable and fixed costs tocomplete the analysis.
2) Use regression to estimate variable and fixed costs tocomplete the analysis.
3) Use calculations done by formula within Excel (including cellreferences).
4) Separate and label the parts of the calculation as Variablecosts (VC), Contribution Margin (CM), Fixed Cost (FC) as annualbreakeven (BE) point for fertilizer (in pounds) is calculated.
5) How many pounds must be spread to earn a target profit of$1,000?
6) What is the margin of safety on that target profit?
7) How many pounds must be sold (spread) if Toby wants a marginof safety of 10% of sales?
8) Is there any additional information that can be made whenmaking these calculations?
| Month | Units | Costs |
| Jan | 200 | 5360 |
| Feb | 150 | 5408 |
| Mar | 250 | 5510 |
| Apr | 450 | 5704 |
| May | 350 | 5550 |
| Jun | 300 | 5405 |
| Jul | 200 | 5305 |
| Aug | 250 | 5509 |
| Sep | 375 | 5458 |
| Oct | 425 | 5700 |
| Nov | 175 | 5300 |
| Dec | 100 | 5250 |
