Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2.(10 points) Perkins Company produces and sells a single product. The company's income statement for the most recent month is given below: Sales (15,000 units

image text in transcribed

2.(10 points) Perkins Company produces and sells a single product. The company's income statement for the most recent month is given below: Sales (15,000 units at $29 per unit). $435,000 Less variable costs: Direct materials (variable).. $60,000 Direct labor (variable).. 75,000 Variable factory overhead... 45,000 Variable selling and other expenses 30,000 210,000 Contribution margin.. 225,000 Less fixed expenses: Fixed factory overhead. 100,000 Fixed selling and other expenses.... .... 85.000 185,000 Net operating income..... $ 40.000 There are no beginning or ending inventories. Required: a. Compute the company's break-even point in units and sales dollars. b. What would the company's monthly net operating income be if sales and total variable costs increased by 30% and total fixed factory overhead dropped by $25,000? c. What total level of sales in units) must the company achieve in order to earn a target profit of $145,000? d. The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 50 percent, but it will double the costs for fixed factory overhead. Every other cost remains unchanged. Compute the new break-even point in units

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Accounting

Authors: Shirine Rathore

2nd Edition

8120336739, 9788120336735

More Books

Students also viewed these Accounting questions