Assume that total fixed cost is $324,800. Compute the net income before income tax based on the sales volumes shown above. Compute the break-even point in total dollars of revenue and in specific unit sales volume for each product. ANSI Prove your break-even calculations by computing the total contribution margin related to your answer in requirement (b). 1. a, (p. 21 ENDING YOUR KNOWLEDGE YOUR LOG EYK6-1. Business Decision Case The following total cost data are for Ralston Manufacturing Company, which has a normal capacity per period of 400,000 units of product that sell for $18 each. For the Solut foreseeable future, regular sales volume should continue at normal capacity of production. y-interc Slope Total c $25,00ublishers 10.000 of fixed cost. What Cambridge Business Publishers Chapter 6 Cost-Volume-Profit Relationships 265 enue is to be $1,600,000? margin ratio is 60%, and enue? Direct materials. ............ $1,720,000 price is $50. What dollar Direct labor . . ............ . . . . 1, 120,000 Variable overhead . .. ........ 560,000 income tax rate is 40%? Fixed overhead (Note 1 ) . ...... . . . 880,000 Selling expense (Note 2) ...... . . . . facilities for the manu- . . . . . . 720,000 Administrative expense (fixed) 200,000 the following data are $5,200,000 Notes: 0 units 1. Beyond normal capacity, fixed overhead cost increases $30,000 for each 20,000 units or fraction thereof until a maximum capacity of 640,000 units is reached. unt 2. Selling expenses are a 10% sales commission. Ralston pays only one-half of the regular sales Unit Cost commission rates on any sale of 20,000 or more units. 000 $14.50 Ralston's sales manager has received a special order for 48,000 units from a large discount chain at a ,000 12.50 special price of $16 each, F.O.B. factory. The controller's office has furnished the following additional 000 6.40 cost data related to the special order: vwidsavd 000 3.80 1. Changes in the product's construction will reduce direct materials $1.80 per unit. 00 $37.20 2. Special processing will add 25% to the per-unit direct labor costs. 3. Variable overhead will continue at the same proportion of direct labor costs. 4. Other costs should not be affected. unit. Ignore income Required Present an analysis supporting a decision to accept or reject the special order. Assume Ralston's S regular sales are not affected by this special order. ring overhead and What is the lowest unit sales price Ralston could receive and still make a before-tax profit of $39,600 on the special order