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Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $4.20 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 429,000 $ 579,600 Variable cost per switch 1.34 0.60 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 205,000 switches per year and what is the total cost of that alternative? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? (Do not round intermediate calculations.) Machine A Machine B Minimum number of switches Req 2: What volume level would produce the same total costs regardless of the machine purchased? Req 3: What is the most profitable alternative for producing 205,000 switches per year and what is the total cost of that alternative?2. Companies that have a high demand for making copies, both color and black and white, often choose to lease a high-end copier that provides fast and reliable service at a reasonable cost. The lease is usually for 3 to 5 years, and the cost to the user is $0.09 per page for black-and-white copies and typically $0.140 per page for color copies. These are the terms of your current 3-year lease contract with Ricoh Company, which is up for renewal this month; the lease terms are expected to be the same for the next 3 years, if renewed. Hewlett-packard Company (HP) developed an innovative copier that can reduce the cost of color copies. The copier measures exactly how much color is used in a color copy so that the price of the copy can be determined by the amount of color used rather than a fixed price per page. The cost could be as low as $0.115 per page for a color copy. HP calls this a "flexible-pricing" approach. Assume for this example that the cost of the leased copier (3-year lease) is only the per-page charge-the initial lease cost is negligible, and the service costs would not differ between the HP copier and the copier you are using now. Your company is an advertising agency, Tanner and Jones LLC, and the quality of the color copies is critical to your business success. The ability to rely on the copier at any time is also very important because some customer requests require urgent attention. You believe that the Ricoh and HP printers are of the same reliability, but you have not had experience with the HP copier to be sure of the copy quality. The demonstration of the HP copier has shown as good or better copy quality, but you have not had 3 years' experience with it to know what it would be like day-to-day. Required: 1. Assume that your company is considering the lease of one of these HP copiers, and you expect that the average price for a color copy for your company would be $0.115 because you would carefully prioritize color copy jobs and reduce the number of copies requiring a large amount of color. You expect that training your copy center staff to properly use the new copier would cost about $6,300 for materials and lost work time. What is the breakeven number of color copies per year that would make you indifferent between the new HP copier and your current copier? (Round your answer up to the nearest whole number.) 2. As in requirement 1, assume you expect that your per-copy cost for color copies with the HP copier will be $0.115, the training costs are $6,300, and you expect to make 170,000 copies per year for the next 3 years. In your negotiations with Ricoh concerning the new lease and the cost of color copies, what price would you bargain for? (Round your answer to 4 decimal places.) 1. Break-even number of color copies per year 2. Bargain price T3. Harold McWilliams owns and manages a general merchandise store in a rural area of Virginia. Harold sells appliances, clothing, auto parts, and farming equipment, among a wide variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he can expect his profits to change with these fluctuations. Harold has the following information for his most recent year. Cost of goods sold represents the cost paid for the merchandise he sells, while operating costs represent rent, insurance, and salaries, which are entirely fixed. Sales $ 760, 000 Cost of merchandise sold 433, 200 Contribution margin 326, 800 Operating costs 151, 790 Operating profit $ 175, 010 Required: 1-a. What is Harold's margin of safety (MOS) in dollars? (Do not round intermediate calculations.) 1-b. What is the margin of safety (MOS) ratio? (Input your answer as a percentage rounded to 2 decimal places (i.e., 0.1567 = 15.67%).) 3. What is Harold's margin of safety (in dollars) and operating profit if sales should fall to $645,000? (Do not round intermediate calculations.) 1-8. Margin of safety (MOS) 1-b. MOS ratio % 3. Margin of safety Operating profitMost businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and the breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among various products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows: Product Units Sold Sales Mix A 18, 512 80% B 4, 628 20 Total 23, 140 100% Assume the following unit selling prices and unit variable costs: Contribution Product Selling Price Variable Cost Margin A $ 96 $ 81 $ 15 B 156 116 40 Fixed costs are $432,000 per year. Assume that the sales mix, expressed in terms of relative physical units sold, is constant as sales volume changes. Required: 1. Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that must be sold. Use the weighted-average contribution margin approach. 3. Determine the overall breakeven point in terms of sales dollars based on the weighted-average contribution margin ratio (CMR). (Hint: The weights for calculating the weighted-average CMR are based on relative sales dollars, not units, of the two products.) Break down the total sales dollars breakeven point into sales dollars for product A and sales dollars for product B. 5. Assume the original facts except that now fixed costs are expected to be $43,200 higher than originally planned. How does this expected increase in fixed costs affect the breakeven point in units? How does the percentage change in the breakeven point compare to the percentage increase in fixed costs? Required 1 Required 3 Required 5 Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that must be sold. Use the weighted-average contribution margin approach. (Round your answer up to the nearest whole number.) Overall break-even point in units units Breakeven sales in units for Product A units Breakeven sales in units for Product B unitsRequired 1 Required 3 Required 5 Determine the overall breakeven point in terms of sales dollars based on the weighted-average contribution margin ratio (CMR). (Hint: The weights for calculating the weighted-average CMR are based on relative sales dollars, not units, of the two products.) Break down the total sales dollars breakeven point into sales dollars for product A and sales dollars for product B. (Do not round Intermediate calculations. Round your final answers to the nearest whole dollar amount.) Show less Overall Breakeven point in dollars Breakeven point in dollars for Product A Breakeven point in dollars for Product B Required 1 Required 3 Required 5 Assume the original facts except that now fixed costs are expected to be $43,200 higher than originally planned. How does this expected Increase in fixed costs affect the breakeven point In units? How does the percentage change In the breakeven point compare to the percentage increase in fixed costs? Percentage change in fixed costs % Percentage change in breakeven point