SBN Corporation produces and sells custom cabinets. The following facts apply to its operation:
-Cabinets are produced in two colours: brown and black.
-Custom cabinets are priced from $300 to $500.
-Last year, SBN's profit was $45,000.
-SBN finances its assets with debt (60%)and equity (40%).
-SBN operates in a competitive market.
-SBN has a relatively high degree of operating leverage.
-Variable cost per unit is generally 40% of the product price.
The managers are uncertain about the volume of sales for the next period because mortgage rates are the lowest they have been in 30 years, driving a large increase in home sales and remodelling. How can the accountant help the managers use CVP analysis to explore alternatives around this expected housing boom?

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The Answer of SBN Corporation produces and sells custom cabinets. The following facts apply to its operation:
-Cabinets are produced in two colours: brown and black.
-Custom cabinets are priced from $300 to $500.
-Last year, SBN's profit was $45,000.
-SBN finances its assets with debt (60%)and equity (40%).
-SBN operates in a competitive market.
-SBN has a relatively high degree of operating leverage.
-Variable cost per unit is generally 40% of the product price.
The managers are uncertain about the volume of sales for the next period because mortgage rates are the lowest they have been in 30 years, driving a large increase in home sales and remodelling. How can the accountant help the managers use CVP analysis to explore alternatives around this expected housing boom?

SBN Corporation Produces and Sells Custom Cabinets