Question
A small manufacturing company in your home town has set the following standard costs using their predicted budget of 10,000 units of production. Direct Materials
A small manufacturing company in your home town has set the following standard costs using their predicted budget of 10,000 units of production. Direct Materials per unit $4.00 Direct Labor per unit 8.00 Variable Overhead per unit 3.00 Fixed overhead per unit 7.00 They planned to sell each unit at $25. 1. What would be the total gross profit for the year if all units sold as planned? 2. The controller feels that is not a large enough gross profit for the year. He thinks the company can work faster and produce and sell an additional 2,500 units. Provide for him a flexible budget at the level of 12,500 so he can determine the profit that could be made. You may use shortcuts to get the costs but be careful and label your calculations. 3. Tie this into what we have learned previously by calculating the breakeven point in units for the controller.
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