5 Fixed and Variable Cost Determinations Unit Cost Calculations LD 8 The projected cost of a lamp is calculated based upon the projected increases or decreases to 13 current costs. The present costs to manufacture one lamp are: 14 15 Lamp Kit: $16.0000000 per lamp 22 Direct Labor 2.0000000 per lamp (4 lamps/hr.) 23 Variable Overhead: 2.0000000 per lamp 24 Fixed Overhead: 10.0000000 per lamp (based on normal capacity of 25.000 lamps) 25 26 Cost per lamp $30.0000000 per lamp 31 32 Expected increases for 20x2 33 When calculating projected increases round to TWO (50.00) decimal places. 34 51 35 1. Material Costs are expected to increase by 4.50% 40 41 2. Labor Costs are expected to increase by 5.00%. 42 43 3. Vanable Overhead is expected to increase by 5.00% 44 49 4. Fixed Overhead is expected to increase to $270.000 50 5. Foxed Administrative expenses are expected to increase to 562.000 52 53 6. Vanable selling expenses (measured on a per lamp basis) are expected to increase 58 by 4 50% 59 60 7. Fixed selling expenses are expected to be $25,000 in 20x2 61 62 8. Variable administrative expenses (measured a per lamp basis) are expected to 67 increase by 4 50% 68 69 On the following schedule develop the following figures 70 1. 20X2 Projected Variable Manufacturing Unit Cost of a lamp 71 76 2.2 Benacted Vanala Lint.cnet.com Introduction FAQ D A B 20x1 Cost C Projected Percent Increase 45 20x2 Cost Rounded to 2 Decimal Places 15 16 16 Lamp Kit 17 Labor 18 Variable Overhead 19 25 Projected Variable Manufacturing Cost Per Unit 26 {4.01) {4.023 {4.03) {4.04 27 28 29 Total Variable Cost Per Unit 20x1 Cost Projected Percent Increase 20x2 Cost Rounded to 2 Decimal Places 35 36 Variable Selling 37 Variable Administrative 38 Projected Variable Manufacturing Unit Cost 39 45 46 Projected Total Vanable Cost Per Unit 47 48 49 {405) {4067 (404 {407} 55 Schedule of Fixed Costs 20x1 Cost Projected Percent Increase 20x2 Cost lamps @ {4.08) 56 57 Foxed Overhead 58 (normal capacity of 59 Fixed Selling 65 Fixed Administrative 66 67 Projected Total Fixed Costs 68 69 75 {4.09 {4.10) {4.11) I See The Light Projected Balance Sheet As of December 31, 20x1 s 34,710.00 67,500.00 Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets 8,000.00 500 @ $16.00 0 3000 @ $30.00 90,000.00 $ 200,210.00 Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets $ 20,000.00 6,800.00 13,200.00 $ 213.410.00 Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ $ 54.000.00 54,000.00 $ 12,000.00 147 410.00 159.410.00 S213.410.00 PART 2 Cost Volume Relationships - Profit Planning Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis based on the following assumptions Note. Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the number of units and then multiply by the selling price per unit. 11. For 20x2 the selling price per lamp will be 545.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? Contribution Margin per unit (Round to two places, S.) Contribution Margin Ratio (Round to four places, % is two of those places %) (5:01) (5.02) 32 For 2012 the selling price per lamp will be $45.00. The desired net income in 20x2 is $190,000. What would sales in units have to be in 20x2 to teach the profit goal? 1 3 4 Breves sales in units (Since we cannot part of a unit round up to the next unitif needed) ntroduction FAQ 1 2 3 4 {5.03) H {5.02) B D E F Contribution Margin Ratio (Round to four places, % is two of those places ####%) 2 For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $190,000 What would sales in units have to be in 20x2 to reach the profit goal? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) (5.03) 13. For 20:2 the selling price per lamp will be 545.00. If the fixed cost increase by $55,000.00 how many lamps must be sold to breakeven? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {5.04) 5 Fixed and Variable Cost Determinations Unit Cost Calculations LD 8 The projected cost of a lamp is calculated based upon the projected increases or decreases to 13 current costs. The present costs to manufacture one lamp are: 14 15 Lamp Kit: $16.0000000 per lamp 22 Direct Labor 2.0000000 per lamp (4 lamps/hr.) 23 Variable Overhead: 2.0000000 per lamp 24 Fixed Overhead: 10.0000000 per lamp (based on normal capacity of 25.000 lamps) 25 26 Cost per lamp $30.0000000 per lamp 31 32 Expected increases for 20x2 33 When calculating projected increases round to TWO (50.00) decimal places. 34 51 35 1. Material Costs are expected to increase by 4.50% 40 41 2. Labor Costs are expected to increase by 5.00%. 42 43 3. Vanable Overhead is expected to increase by 5.00% 44 49 4. Fixed Overhead is expected to increase to $270.000 50 5. Foxed Administrative expenses are expected to increase to 562.000 52 53 6. Vanable selling expenses (measured on a per lamp basis) are expected to increase 58 by 4 50% 59 60 7. Fixed selling expenses are expected to be $25,000 in 20x2 61 62 8. Variable administrative expenses (measured a per lamp basis) are expected to 67 increase by 4 50% 68 69 On the following schedule develop the following figures 70 1. 20X2 Projected Variable Manufacturing Unit Cost of a lamp 71 76 2.2 Benacted Vanala Lint.cnet.com Introduction FAQ D A B 20x1 Cost C Projected Percent Increase 45 20x2 Cost Rounded to 2 Decimal Places 15 16 16 Lamp Kit 17 Labor 18 Variable Overhead 19 25 Projected Variable Manufacturing Cost Per Unit 26 {4.01) {4.023 {4.03) {4.04 27 28 29 Total Variable Cost Per Unit 20x1 Cost Projected Percent Increase 20x2 Cost Rounded to 2 Decimal Places 35 36 Variable Selling 37 Variable Administrative 38 Projected Variable Manufacturing Unit Cost 39 45 46 Projected Total Vanable Cost Per Unit 47 48 49 {405) {4067 (404 {407} 55 Schedule of Fixed Costs 20x1 Cost Projected Percent Increase 20x2 Cost lamps @ {4.08) 56 57 Foxed Overhead 58 (normal capacity of 59 Fixed Selling 65 Fixed Administrative 66 67 Projected Total Fixed Costs 68 69 75 {4.09 {4.10) {4.11) I See The Light Projected Balance Sheet As of December 31, 20x1 s 34,710.00 67,500.00 Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets 8,000.00 500 @ $16.00 0 3000 @ $30.00 90,000.00 $ 200,210.00 Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets $ 20,000.00 6,800.00 13,200.00 $ 213.410.00 Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ $ 54.000.00 54,000.00 $ 12,000.00 147 410.00 159.410.00 S213.410.00 PART 2 Cost Volume Relationships - Profit Planning Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis based on the following assumptions Note. Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the number of units and then multiply by the selling price per unit. 11. For 20x2 the selling price per lamp will be 545.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? Contribution Margin per unit (Round to two places, S.) Contribution Margin Ratio (Round to four places, % is two of those places %) (5:01) (5.02) 32 For 2012 the selling price per lamp will be $45.00. The desired net income in 20x2 is $190,000. What would sales in units have to be in 20x2 to teach the profit goal? 1 3 4 Breves sales in units (Since we cannot part of a unit round up to the next unitif needed) ntroduction FAQ 1 2 3 4 {5.03) H {5.02) B D E F Contribution Margin Ratio (Round to four places, % is two of those places ####%) 2 For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $190,000 What would sales in units have to be in 20x2 to reach the profit goal? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) (5.03) 13. For 20:2 the selling price per lamp will be 545.00. If the fixed cost increase by $55,000.00 how many lamps must be sold to breakeven? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {5.04)