4. Should the company consider the changes from excel Q7? Why or why not? Give some real examples of additional cost increases for fixed costs and decreases for direct materials that could be implemented for this specific business. (at least 3 examples in total) Please consider and discuss the following areas: fixed costs change, CM per unit change and sales fluctuation. I would recommend creating a new spreadsheet (with the changes) with the same volumes as excel Q6 and additional volumes to understand how to answer this question.

... AutoSave . OFF A BE ? ' C ... Research Project Home Insert Draw Page Layout Formulas Data Review View ? Tell me Share Comments K Cut Calibri (Body) 12 ag Wrap Text v Custom Normal Bad _ AutoSum Copy Fill v Paste BIU SAV Merge & Center v v % " | 68 98 Conditional Format Good Neutral Insert Delete Format Sort & Find & Analyze Format Formatting as Table Clear v Filter Select Data H16 + X V fx A B C D E F G H K L M N O P CVP Income Statement Per Volume CVP Income Statement Question 7 Unit 1,200 1,800 2500 Units 1,854 2575 Direct materials discount $252,000.00 Selling Price $6,069.60 $6,069.60 $6,069.60 Selling Price $6,069.60 $6,069.60 Direct material: $4,788,000.00 Sales $7,283,520.00 $15,174,000.00 Sales $11,253,038.40 $15,629,220.00 Per unit cost $2.660.00 6 Variable Costs $3,736,133.33 $5,604,200.00 $7,783,611.11 Variable Costs $5,512,766.00 $7,656,619.44 Fixed cost 45% add $574,650.00 Contribution Margin $3,547,386.67 $5,321,080.00 $7,390,388.89 Contribution Margin $5,740,272.40 $7,972,600.56 total fixed costs $1,851,650.00 9 00 Fixed Cost $1,277,000.00 $1,277,000.00 $1,277,000.00 Fixed Costs $1,851,650.00 $1,851,650.00 total variable costs $2,973.44 Net Income $2,270,386.67 $4,044,080.00 $6,113,388.89 Net Income $3,888,622.40 $6,120,950.56 10 Assumptions The materials include $2,800 for the wood and other materials on a per job basis It requires 24 hours of labor on average for the cabinetry. The hourly rate is$11 The sales price will be set at a markup of 80% The company estimates that it will have 43,200 direct labor hours in total for the cabinets. 16 1800 units are sold on average per year 18 Cost Cost Classificat Cost Classification 2 Annual Cost Per Unit Cost (variable only) 19 Direct Materials Product Variable $5,040,000.00 $2,800.00 20 Direct Labor Product Variable $475,200.00 $264.00 1 Salaries - Office & Administrative Period Fixed $500,000.00 Salaries - Factory Personnel Product Fixed $350,000.00 Office Rent Period Fixed 150,000.00 Factory Rent Product Fixed $30,000.00 Office Utilities & Misc Expenses Period Variable $15,000.00 $8.33 26 Sales Travel Period Variable $24,000.00 $13.33 Office Insurance Period Fixed $12,000.00 28 Depreciation - Office Equipment Period Fixed $40,0 Depreciation - Factory Equipment Product Fixed 70,000.00 30 Advertising Period Fixed $20,000.00 1 Sales Commission Period Variable $50,000.00 $27.78 Factory Property Taxes Product Fixed $25,000.00 Maintenance for Factory Equipment Product Fixed $80,000.00 $3,113.44