Every answer in the AC239 Unit 4 cost volume profit analysis, from break-even and target volume to margin of safety and two what-if cases, runs off one unit contribution margin. Searches like "ac 239 unit 4 assignment example", "ac239 unit 4 sample" and "ac239 unit 4 example" land here.
What a finished AC239 Unit 4 cost volume profit analysis looks like
The page opens with a data block: selling price per unit, variable cost per unit, total fixed costs, and current or budgeted sales volume. Contribution margin per unit and the contribution margin ratio are computed there, once. Five labeled answers follow, each a short equation with its figures substituted and the result boxed: break-even units, break-even sales dollars, units required for the target profit, margin of safety in dollars and as a percentage of sales, and the degree of operating leverage at current volume. A small what-if table comes next, recomputing break-even and profit under a price cut and under a rise in fixed costs. The finished version also includes a simple graph with total revenue and total cost lines crossing at break-even, the profit and loss areas shaded and labeled.
How a AC239 Unit 4 example is structured
Everything flows from the data block, and no input is restated below it. The answers run in the order a manager would ask them: where the business stops losing money, what it takes to earn the target, how far current sales sit above break-even, and how sharply profit responds to a change in volume. Each answer shows the equation in words, then in figures, then the result, so a grader can see whether an error is conceptual or arithmetic. Target profit uses fixed costs plus the desired profit over the unit contribution margin; where the target is stated after tax, it is grossed up to pretax in a visible step. The what-if table sits after the base answers because each scenario changes one input and recomputes. A paragraph closes the analysis, reading margin of safety and leverage together as a statement of risk.
Data block and contribution
Price, variable cost, fixed costs and current volume, with unit contribution margin and the ratio computed once and cited by every answer below.
Break-even two ways
Fixed costs over unit contribution for units, over the ratio for dollars. The two results are cross-checked by multiplying units by price.
Target profit
Fixed costs plus desired profit, divided by unit contribution. An after-tax target is grossed up to pretax in a separate, visible step before dividing.
Margin of safety and leverage
Current sales less break-even sales, in dollars and as a percentage, then contribution over operating income as the leverage factor at this volume.
Two what-if cases
A price cut and a fixed-cost increase, each changing one input and recomputing break-even and profit, laid out in a small table beside the base case.
Where marks go in AC239 Unit 4
Using gross margin per unit as the divisor, instead of contribution margin per unit, costs the most: fixed production cost then sits in both the numerator and the margin, and the break-even point comes out too high while still looking reasonable. A contribution margin ratio applied to units, or a unit margin applied to dollars, is next and easy to spot when the result has the wrong scale. After-tax targets divided directly without converting to pretax understate the required volume. Fractional units rounded down at break-even, leaving the business a sliver short, lose small points. What-if cases that change two inputs at once blur the effect of each. A set of correct answers with no reading of margin of safety or leverage forfeits the marks set aside for interpretation.
Get a AC239 Unit 4 example written to your instructions
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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.
Why does the degree of operating leverage matter?
It says how many times faster profit moves than sales at the current volume. A leverage factor of four means a ten percent drop in sales cuts operating income by about forty percent. AC239 problems often ask for it alongside margin of safety because the two together describe how exposed the business is, and the reading paragraph in the sample uses both.
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.