1
answer
0
watching
363
views
28 Sep 2019
Poole Corporation has collected the following information after itsfirst year of sales. Net sales were $1,706,800 on 100,400 units;selling expenses $237,000 (40% variable and 60% fixed); directmaterials $511,000; direct labor $280,000; administrative expenses$281,000 (20% variable and 80% fixed); manufacturing overhead$361,000 (69% variable and 31% fixed). Top management has asked youto do a CVP analysis so that it can make plans for the coming year.It has projected that unit sales will increase by 10% nextyear.
Compute (1) the contribution margin for the current year and theprojected year, and (2) the fixed costs for the current year.(Assume that fixed costs will remain the same in the projectedyear.)
Compute the break-even point in units and sales dollars for thecurrent year.
he company is considering a purchase of equipment that would reduceits direct labor costs by $104,700 and would change itsmanufacturing overhead costs to 31% variable and 69% fixed (assumetotal manufacturing overhead cost is $361,000, as above). It isalso considering switching to a pure commission basis for its salesstaff. This would change selling expenses to 90% variable and 10%fixed (assume total selling expense is $237,000, as above).Assuming that net sales remain at first-year levels, compute (1)the contribution margin and (2) the contribution margin ratio, andrecompute (3) the break-even point in sales dollars.
Poole Corporation has collected the following information after itsfirst year of sales. Net sales were $1,706,800 on 100,400 units;selling expenses $237,000 (40% variable and 60% fixed); directmaterials $511,000; direct labor $280,000; administrative expenses$281,000 (20% variable and 80% fixed); manufacturing overhead$361,000 (69% variable and 31% fixed). Top management has asked youto do a CVP analysis so that it can make plans for the coming year.It has projected that unit sales will increase by 10% nextyear.
Compute (1) the contribution margin for the current year and theprojected year, and (2) the fixed costs for the current year.(Assume that fixed costs will remain the same in the projectedyear.)
Compute the break-even point in units and sales dollars for thecurrent year.
he company is considering a purchase of equipment that would reduceits direct labor costs by $104,700 and would change itsmanufacturing overhead costs to 31% variable and 69% fixed (assumetotal manufacturing overhead cost is $361,000, as above). It isalso considering switching to a pure commission basis for its salesstaff. This would change selling expenses to 90% variable and 10%fixed (assume total selling expense is $237,000, as above).Assuming that net sales remain at first-year levels, compute (1)the contribution margin and (2) the contribution margin ratio, andrecompute (3) the break-even point in sales dollars.
Compute (1) the contribution margin for the current year and theprojected year, and (2) the fixed costs for the current year.(Assume that fixed costs will remain the same in the projectedyear.)
Compute the break-even point in units and sales dollars for thecurrent year.
he company is considering a purchase of equipment that would reduceits direct labor costs by $104,700 and would change itsmanufacturing overhead costs to 31% variable and 69% fixed (assumetotal manufacturing overhead cost is $361,000, as above). It isalso considering switching to a pure commission basis for its salesstaff. This would change selling expenses to 90% variable and 10%fixed (assume total selling expense is $237,000, as above).Assuming that net sales remain at first-year levels, compute (1)the contribution margin and (2) the contribution margin ratio, andrecompute (3) the break-even point in sales dollars.
Casey DurganLv2
28 Sep 2019
Related questions
| Problem 2 involvesa fixed asset decision. | ||||||||
| FACTS: | ||||||||
| 1. Elliott Incorporatedmanufactures garden tools, and although the manufacturing equipmentis perfectly functional, it is not modern. | ||||||||
| 2. Upgrading to modernequipment would speed up the manufacturing process such that directlabor and variable manufacturing costs | ||||||||
| wouldbe reduced by 40% on a per-unit basis. Hint: You do not needcurrent units produced to calculate this problem. | ||||||||
| 3. The cost of such an upgradewould equal $1,500,000 per year for depreciation and financingcosts net of tax benefits of these costs. | ||||||||
| 4. The additional costs wouldbe accounted for as fixed manufacturing overhead. | ||||||||
| 5. Elliott is currentlyoperating at full capacity and management believes they couldincrease sales to $6,000,000 at current prices if | ||||||||
| they hadadditional capacity. | ||||||||
| Elliott's current sales andcosts are as follows: | ||||||||
| Sales | $4,500,000 | |||||||
| Direct materials | 780,000 | |||||||
| Direct labor | 1,540,000 | |||||||
| Manufacturing overheadâvariable | 364,500 | |||||||
| Manufacturing overheadâfixed | 750,000 | |||||||
| Selling expensesâvariable | 90,000 | |||||||
| Selling expensesâfixed | 250,000 | |||||||
| Administrative expensesâvariable | 60,000 | |||||||
| Administrative expensesâfixed | 200,000 | |||||||
| a. Prepare a CVP for Elliottbased on the current production. | ||||||||
| d. Prepare a CVP based on theproposed equipment upgrade. | ||||||||
