2. Finch Corporation sells hammocks; variable costs are $75each, and the hammocks are sold for $137 each. Finch incurs$377,200 of fixed operating expenses annually.
Required
A.
Finch is considering implementing a quality improvement program.The program will require a $9 increase in the variable cost perunit. To inform its customers of the quality improvements, thecompany plans to spend an additional $12,350 for advertising.Assuming that the improvement program will increase sales to alevel that is 5,400 units above the amount computed in Requirementa, prepare a budgeted income statement using the contributionmargin format.
FINCHCORPORATION IncomeStatement Sales Variable cost Contribution margin Fixed cost Netincome
B.
Determine the new break-even point in units and sales dollars aswell as the margin of safety percentage, assuming that the qualityimprovement program is implemented. (Round intermediatecalculations to nearest whole number. Round "Margin of safety"answer to 1 decimal place. (i.e., .234 should be entered as23.4))
Break-even pointin units Break-even pointin sales dollars Margin ofsafety %
2. Finch Corporation sells hammocks; variable costs are $75each, and the hammocks are sold for $137 each. Finch incurs$377,200 of fixed operating expenses annually.
Required
A.
Finch is considering implementing a quality improvement program.The program will require a $9 increase in the variable cost perunit. To inform its customers of the quality improvements, thecompany plans to spend an additional $12,350 for advertising.Assuming that the improvement program will increase sales to alevel that is 5,400 units above the amount computed in Requirementa, prepare a budgeted income statement using the contributionmargin format.
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B.
Determine the new break-even point in units and sales dollars aswell as the margin of safety percentage, assuming that the qualityimprovement program is implemented. (Round intermediatecalculations to nearest whole number. Round "Margin of safety"answer to 1 decimal place. (i.e., .234 should be entered as23.4))
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