| Course | AC239 Managerial Accounting |
|---|---|
| Unit | Unit 4 |
| Paper type | Cost volume profit analysis |
| Length | About 610 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC239 Unit 4
Seven Thousand Beds to Break Even: A Unit 4 Cost Volume Profit Analysis for a Large Orthopedic Dog Bed
[Student Name]
Purdue University Global
AC239: Managerial Accounting
Unit 4 Cost Volume Profit Analysis
[Instructor Name]
[Date]
Burrow Bedworks, the product and its figures are composite; the textbook, the management accounting history and the cost behavior study cited are real.
Data Block
Selling price per bed: $120.00. Variable cost per bed: $66.00. Fixed costs attributed to the large bed line: $378,000 a year. Budgeted volume: 10,500 beds.
Contribution margin per bed: $120.00 minus $66.00 equals $54.00. Contribution margin ratio: $54.00 divided by $120.00 equals 45 percent.
Answer 1: Break-Even Units
$378,000 divided by $54.00 equals 7,000 beds.
Answer 2: Break-Even Sales Dollars
$378,000 divided by 0.45 equals $840,000. Check: 7,000 times $120.00 equals $840,000.
Answer 3: Units for a $108,000 Target Profit
($378,000 plus $108,000) divided by $54.00 equals $486,000 divided by $54.00, or 9,000 beds.
Answer 4: Margin of Safety
Budgeted sales: 10,500 times $120.00 equals $1,260,000. Margin of safety: $1,260,000 minus $840,000 equals $420,000, or 3,500 beds. As a percentage of budgeted sales: $420,000 divided by $1,260,000 equals 33.3 percent.
Answer 5: How Sharply Profit Responds to Volume
At 10,500 beds, contribution margin is 10,500 times $54.00, or $567,000, and operating income is $567,000 minus $378,000, or $189,000. The multiplier, contribution margin divided by operating income, is $567,000 divided by $189,000, or 3.0.
A multiplier of 3.0 means a 10 percent change in sales from the budget would change operating income by about 30 percent, which is the same idea as the margin of safety seen from the other side.
The two measures are linked: the multiplier is the reciprocal of the margin of safety percentage, 1 divided by 0.333, or 3.0.
What-If Table
1. Price cut to $112.00, cost and volume unchanged: contribution margin $46.00; break-even $378,000 divided by $46.00 equals 8,217.4, or 8,218 beds; profit at 10,500 beds equals 10,500 times $46.00 minus $378,000, or $105,000.
2. A new foam cutter lease adds $27,000 of fixed cost, price unchanged: break-even $405,000 divided by $54.00 equals 7,500 beds; profit at 10,500 beds equals $567,000 minus $405,000, or $162,000.
An $8 price cut, under 7 percent, would raise break-even by 1,218 beds and cut budgeted profit by 44 percent. The lease raises break-even by 500 beds and costs $27,000 of profit. The price cut is the larger risk unless it would raise volume by more than about 1,800 beds, the amount needed to restore $189,000 of profit at the lower margin.
The Graph, Described
Volume runs along the horizontal axis from 0 to 12,000 beds and dollars up the vertical axis. A flat fixed cost line sits at $378,000. The total cost line starts at $378,000 and rises $66 per bed. The revenue line starts at zero and rises $120 per bed. The lines cross at 7,000 beds and $840,000; the gap between them to the right is profit, and to the left is loss.
Assumptions
The analysis assumes price and variable cost per bed stay constant across the range, fixed costs do not change with volume, and the large bed's sales do not draw volume away from the medium bed (Franklin et al., 2019). Those assumptions hold best over a relevant range near current volume, and research on cost behavior shows they can fail when volume falls, because many fixed costs are not cut as quickly as sales drop (Anderson et al., 2003). Cost volume profit analysis has been a core management accounting tool since early in the twentieth century precisely because it is simple enough to use inside those limits (Johnson & Kaplan, 1987).
References
Anderson, M. C., Banker, R. D., & Janakiraman, S. N. (2003). Are selling, general, and administrative costs "sticky"? Journal of Accounting Research, 41(1), 47-63. https://doi.org/10.1111/1475-679X.00095
Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 2: Managerial accounting. OpenStax. https://openstax.org/details/books/principles-managerial-accounting
Johnson, H. T., & Kaplan, R. S. (1987). Relevance lost: The rise and fall of management accounting. Harvard Business School Press.
The Purdue Global AC239 Unit 4 instructions
For the fourth AC239 unit, students receive one product's price, variable cost and fixed costs and answer a set of cost volume profit questions. Start with a data block that computes contribution margin per unit and the contribution margin ratio once. Then give each answer as a short equation with figures substituted: break-even units, break-even sales dollars, units for the target profit, margin of safety in dollars and percent, and the operating income multiplier at budgeted volume. Add a what-if table showing how a price change or a fixed cost change moves break-even and profit. Many sections want a simple graph or a description of one. State the assumptions behind the model. A tidy two-page answer is usual, and an APA 7 textbook citation should support the formulas.
How the AC 239 Unit 4 example is put together
The sample's data block gives the $120 price, $66 variable cost, $378,000 of fixed costs and a 10,500-bed budget, and computes the $54 contribution and 45 percent ratio. Five answers follow: 7,000 beds, $840,000, 9,000 beds for the target, a $420,000 margin of safety at 33.3 percent, and a multiplier of 3.0 from $567,000 of contribution over $189,000 of profit. The highlighted sentence interprets the multiplier and links it to the margin of safety. A what-if table recomputes break-even and profit for a price of $112 and for an added lease, and a paragraph compares the two risks. The graph is described line by line, and a closing section lists the model's assumptions with research on cost behavior.
AC239 Unit 4 rubric: what earns full points
Cost volume profit answers are graded on correct formulas, correct substitution and correct results, so each equation should be visible. Break-even in units and dollars should agree with each other. The target profit calculation must add the profit to fixed costs before dividing. Margin of safety is checked in both dollars and percent. The what-if analysis earns interpretation credit when it explains which change matters more. A graph, where required, must show the crossing at break-even. Naming the model's assumptions, such as a constant price and a relevant range, shows judgment. Sources in APA 7 round out the score for the CVP unit.
Common AC239 Unit 4 mistakes, and how to avoid them
The most common cost volume profit error is dividing fixed costs by price instead of contribution margin. Others compute break-even dollars from the variable cost ratio. Target profit is added after dividing, which understates the volume needed. Margin of safety is measured from the wrong base. What-if cases change two inputs at once so the effect of each is lost. The graph places fixed costs above the total cost line. Assumptions are left out. When the price, cost and fixed figures from your problem are set but the answers will not reconcile, our writers can work each equation from them.
Get an AC239 Unit 4 example written to your instructions
A CVP answer is only as good as its four inputs, so the Unit 4 price, variable cost, fixed costs and target profit should come with the rubric and any graph requirement. Every equation returns within 24-48h shown in words and in figures. No charge applies to the first custom sample. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC239 Unit 4 questions, answered
What if the company sells more than one product?
Then break-even depends on the sales mix. The sample computes a weighted average contribution margin per unit from the mix the problem gives, finds break-even in total units, and divides that total back into each product's share. A sentence notes the assumption that the mix holds constant, since a shift toward the lower-margin product raises break-even even with prices unchanged.
Is the graph required?
Only where the instructions ask for one, but it helps a reader see break-even as the point where the revenue and total cost lines cross. When included, the axes are labeled with units and dollars, fixed cost appears as the intercept of the total cost line, and the break-even point is marked with its value so nobody has to estimate it from the axes.
Where can I find a free AC239 Unit 4 sample paper?
The complete AC239 Unit 4 cost volume profit analysis on this page finds break-even, target volume, margin of safety and a profit multiplier for a large dog bed, with a what-if table.
Which risk is larger in the AC239 Unit 4 sample?
The $8 price cut. It raises break-even by 1,218 beds and cuts budgeted profit by 44 percent, while a $27,000 lease raises break-even by 500 beds and costs $27,000 of profit.
What does a profit multiplier of 3.0 mean in the AC239 Unit 4 sample?
At 10,500 beds, a 10 percent change in sales would change operating income by about 30 percent. It is contribution margin divided by operating income, and the reciprocal of the 33.3 percent margin of safety.