[( #6 & 7 )]

Super Duper Manufacturing In December 2020, John Cain, President, and Cathy Abel, Controller, of Super Duper Manufacturing (SDM) were checking the budgeted figures for SDM's 2021 operations. SDM's parent company Extreme Duper Manufacturing has established a target profit for Super of $540,000 for the coming year. John and Cathy wanted to make sure they could meet the target In early 2020, SDM a large manufacturer of radio equipment had set up operations in Denver to manufacture two products. One was a miniature signaling device used primarily for remote operation of garage doors. These \"ABl" units consisted of a signal sender, about half the size of a pack of cards, and a receiver, which was a bit larger. A large manufacturer of motorized garage doors had agreed to take a minimum of 156,000 ABl control units a year. John and Cathy thought that a budget of 216,000 units was a reasonable manufacturing target for 2021. SDM also had designed a similar device that could be used by a household to turn on lights when arriving after dark. This unit, called \"CD2\" was slightly more expensive to make since the receiving part was a complete plug-in device, while the A31 receiver was a component of the garage door unit. Initially, SDM expected to sell the CD2 unit primarily through mail order catalogues. John and Cathy projected sales of 384,000 units for 2021. Looking at the budget, Cathy indicated, "I'm relieved to see that our projections result in a budgeted profit that exceeds the target of $540,000 profit for next year expected by the parent company.\" \"Me too,\" replied John. \"But we don't have a large margin for error. Let's see what level of sales would be required to provide the parent company with its targeted profit of $540,000 for the year.\" To start, Cathy pulled out the monthly budgeted figures shown in Exhibit 1. In addition to these figures, fixed selling and administrative expenses are expected to be $210,000 a month while variable manufacturing overhead supplies cost is expected to be $88,000 for the 50,000 units. She recognized that the budget was only approximate since she expected that changes would be made to improve efficiency and perhaps the product design. But she thought the numbers were solid enough for her to use in her analysis of what was necessary to reach the parent company's target profit. In preparing her analysis, she decided to assume that parts, direct labor, and overhead supplies could be considered as variable cost since they would vary with units produced, and all the rest would be fixed within the time frame and volume range being considered. (Single product breakeven). Assume SDM budgets to manufacture all 50,000 units of only one product ABl (ignore CD2 and its variable parts and labor cost in this question). Using the selling price of $30 for all 50,000 units and your computed unit VC costs (parts, labor and variable supplies) of A31, and total fixed costs for the entire company, answer the following questions: a. Prepare a budgeted contribution income statement to compute the NOI for SDM (3 points) b. What is the breakeven point in sales and units for SDM? (2 points) c. What is the margin of safety in units, dollars and percent? (2 points) d. If SDM wanted to generate $67,950 in monthly NOI, how many units of A31 must it sell and what is the sales dollars? Proof your answer by creating a contribution margin statement. (3 points) (Multiple product breakeven). What is the monthly breakeven in sales and units of A31 and CD2 given the original monthly budget information? Create a contribution income statement to proof your answer. (5 points). Super Duper Manufacturing Company 2021 Monthly Budget Exhibit 1 Sales: AB1 CD2 Total Produce and sell per month Units 18,000 32,000 50,000 Projected selling price $30.00 $14.00 Manufacturing Cost: Parts 92,000 124,000 216,000 Direct Labor 108,000 66,000 174,000 MFC Overhead (see below) 135,000 197,500 332,500 335,000 387,500 722,500 *Additional Information on Manufacturing Overhead Cost (MFC): Variable Supplies 88,000 Fixed MOH Occupancy (utilities, rent, maintenance) 36,000 Equipment maintenance 35,000 Equipment depreciation 24,500 Quality control and production engineering 54,000 Manufacturing administration 95,000 Total Manufacturing (MFC) Overhead 332,500Sales $988,000 Less: COGS ($722,500) Gross Profit $265,500 Less: SGA ($210,000) Net Income $55,500Sales $988,000 Less: Variable cost ($4_78,0_00). Contribution margin $510,000 Less: Fixed cost (il Net income $55,500 3. Total manufacturing cost per unit = $722,500 / 50,000 = $14.45 AB1 = $14.45 x (18,000/50,000) = $5.202 or $5.20 CD2 = $14.45 x (32,000/50,000) = $9.248 or $9.25 Requirement #4 DOL = CM / net income = $510,000 / $55,500 = 9.189Sales $1,202,200 Less: Variable cost ($578,380) Contribution margin $623,820 Less: Fixed cost ($505,845) Net Income $117,975