ANALYZE CASE A To help you to answer each question, prepare a contribution format income statement table with columns for the contribution margin per unit and the contribution ratio, as explained in Course Materials Unit Six Ch 20 in "CVP Analysis for Problem Solving." Fill in as many items as you can. You may not be able to fill in all spaces, but you can use the format to understand the relationships. Prepare a contribution format income statement table for each question. You should have 4 tables in your solution. An example is provided in the first question. Round per-unit $ amounts to 4 decimal places. ($0.1234) Round totals to no decimal places. ($123,456) Round percentages to 2 decimal places (11.12%). When possible, make your calculations in one string without rounding intermediate values. 1. Kerchoo! Flag Company has a per unit variable cost of $10.00 per unit, which is 50% of the selling price. Fixed costs are $100,000. Calculate break even in sales $ and units using the contribution margin and contribution margin approach and the contribution margin income statement table. No equation approach, that is, do not copy formulas/equations from the text and then substitute in values. There is enough of that in MyLab. Use the table. Total Amount (Contribution Margin Income Statement) Contribution Margin per Unit Contribution Margin Ratio Net Revenue Less Variable Costs Contribution Margin Less Fixed Costs Operating Income 2. What must Kerchoo! sell in $ and units to earn an operating income of $25,000? Calculate break even in sales $ and units using the contribution margin and contribution margin approach and the contribution margin income statement table. No equation approach! 3. Based on the original figures in question #1, what would happen to the break even if Kershoo! began a promotion that would increase per unit variable costs by 10%? Anticipated sales volume is 17,500 flags. Is the promotion a good idea? Use the contribution margin and contribution margin approach and the contribution margin income statement table. No equation approach! 4. Based on the original figures in question #1, what happens if Kerchoo! adds machinery to automate production, which will increase fixed costs by $30,000 and decrease per unit variable costs 20%? Would you recommend this change? Use the contribution margin and contribution margin approach and the contribution margin income statement table. No equation approach! 5. Analyze and interpret your results from question 4 in comparison to your results from question 1. Limit 200 words. AND Answer Question B. There is an image below showing four graphs of different cost behaviors. (If you cannot see the image, please contact MCCC IT Help at 215-641-6495.) Which graph most accurately describes the cost behavior? Cost Graph One Cost Graph Two 0 Total Units Produced 0 Total Units Produced Cost Graph Three Cost Graph Four 0 0 Total Units Produced Total Units Produced a. Natural gas to heat the factory furnaces, $450 per month plus $1.25 per cubic foot b. 24-hour factory security, $12,000 per month C. Per-unit direct materials cost d. Total direct labor cost e. Per-unit cost of straight line depreciation on factory equipment f. Total cost of quality control department, $5000 per month plus $4 per unit
