Multi-Level Profitability Analysis AccuMeter manufactures and sells its only product (Z1) in lot sizes of 500 units. Because of this approach, lot (batch)-level costs are regarded as variable for CVP analysis. Presented is sales and cost information for the year 2012:

Salesreveniier SO; OOO Umitsyat b4.0)iaeas antecs eiarictcasetsc rvernatearttieteaasfaltensede ts $2,000,000 Dircoumatenialsi S0OOOhumitsiatoillO) fares o5-

a. Prepare a traditional contribution income statement in good form.

b. Prepare a multi-level contribution income statement in good form. (Hint: First determine the appropriate cost hierarchy.)

c. What is the current contribution per lot (batch) of 500 units?

d. Management is contemplating introducing a limited number of specialty products. One product would sell for $60 per unit and have direct materials costs of $12 per unit. All other costs and all production and sales procedures will remain unchanged. What lot (batch) size is required for a contribution of $700 per lot?
MANAGEMENT APPLICATIONS