ACCTG 432 20185 in-class Assignment #1 Name: XYZ Company produces a variety of chemicals. One division makes reagents for laboratories. Costs incurred for last month are as follows (v stands for variable): Direct materials used (v) Direct manufacturing labor costs (v) Plant energy costs ( Indirect manufacturing labor costs (v) Indirect manufacturing labor costs Idle labor costs (estimated to be 5% of the direct manufacturing costs Materials transportation-in costs (v) R&D 149500 34500 6000 12000 17000 | 1725 1000 20000 | 5000 Building depreciation (Straight-line, 70% of the space is for production purpose Other indirect manufacturing costs (v) Other indirect manufacturing costs Delivery costs to customersv) 7000 27000 1080 126000 80000 SG&A(V) SG&A Variable manufacturing costs are variable with respect to units produced. Variable SG&A costs are variable with respect to units sold Inventory data are as follows: Endi 2,300 lbs 0 units ? units Direct materials 0 units 0 units Work in process Finished goods Last month production was 115,000 units. Two pounds of direct materials are used to make one unit of finished product. Last month revenues were $540,000. The selling price per unit and the purchase price per pound of direct materials were stable throughout the year. The company's ending inventory of finished goods is carried at the average unit manufacturing cost. Finished-goods inventory ending balance was $15,400. Required 1. Compute the contribution margin per unit, and calculate the break-even point in units (round to the nearest unit). Calculate the contribution margin ratio and the break-even sales revenue The divisional manager has decided to increase the advertising budget by $40,000. This will increase sales revenue by $400,000. By how much will operating income increase or decrease as a result of the action? Suppose sales revenues exceed the estimated amount on the income statement by $315,000. Without preparing a new income statement, by how much are profits underestimated? Refer to the original data. How many units must be sold to earn an after-tax profit of $360,000? Assume a tax rate of 40 percent. Compute the margin of safety based on the original income statement. Compute the operating leverage based on the original income statement. If sales 20 percent greater than expected, what is the percentage increase in profits? 2. 4. 5. 6