ACT 5140 Accounting for Decision Makers HW #5 Chapter 3 Directions: Please submit your work in Word or PDF formats only. You can submit an Excel file to support calculations, but please cut and paste your solutions into the Word or PDF file. Be sure to show how you did your calculations. Also, please be sure to include your name at the top of the first page of your file. The assignment is due by 11:59 PM on April 15. Please run spell check and proofread your answers. If you have any questions, please e-mail me at af878@nova.edu or andrew.felo@gmail.com. Good luck! NOTE: This assignment is the intellectual property of Dr. Andrew J. Felo. It may not be posted to any website without the express written consent of Dr. Felo. Question #1 The Nicholas Corporation sells only one product. The following is budgeted information for that product: Annual production and sales capacity (units) 200,000 Budgeted selling price $100 per unit Variable cost of goods sold $46 per unit Fixed manufacturing costs $602,000 Variable selling and administrative costs $14 per unit Fixed selling and administrative costs $802,000 Nicholass corporate tax rate is 37.5%. a) How many units does Nicholas need to sell to breakeven? b) How much revenue does Nicholas need to generate to breakeven? c) How many units does Nicholas need to sell to earn an operating profit (before taxes) of $546,000? d) How much revenue does Nicholas need to generate to earn net income (after taxes) of $273,800? e) Assume Nicholas is currently producing and selling 100,000 units. By what percentage will operating income change if sales increase by 15% from 100,000 units? Be sure to provide figures to justify your answer. f) Assume Nicholas is currently producing and selling 100,000 units. By what percentage will operating income change if sales decrease by 12% from 100,000 units? Be sure to provide figures to justify your answer. Question #2 A production company is planning to sell tickets to a show for $175 each. It budgets variable costs to be $25 per attendee. Total fixed costs are estimated to be $180,000. The theatre can accommodate up to 1,000 people because of safety concerns. What should the production company do? Why? Be specific in your response. Question #3 The following is budgeted information for the Betty Corporation: Product 1 Product 2 Annual production & sales 80,000 20,000 Projected selling price $45 $100 Direct Production Cost Information Materials (per unit) $8 $14 Direct Labor (per unit) $13 $22 Additional information: Selling & administrative costs (a mixed cost) are budgeted to be $865,000 at the production and sales listed above. The variable component is $4 per unit (same for each product). Manufacturing overhead costs (a mixed cost) are budgeted to be $1,301,000 at the production and sales listed above. The fixed component is $701,000. Each product uses the same amount of variable manufacturing overhead per unit. Assuming the budgeted sales mix remains intact, how many units of each product does Betty need to sell in order to break even