Question
Average selling price per premium garage door. . . . . . . . . $1,000 Average variable manufacturing cost per door. . . .
| Average selling price per premium garage door. . . . . . . . . | $1,000 |
| Average variable manufacturing cost per door. . . . . . . . | $500 |
| Average variable selling cost per door. . . . . . . . . . . . . | $100 |
| Total annual fixed costs. . . . . . . . . . . . . . . . . . . . . . . . | $200,000 |
Garage Doors has undertaken several sustainability projects over the past few years. Management is currently evaluating whether to develop a comprehensive software control system for its manufacturing operations that would significantly reduce scrap and waste generated during the manufacturing process. If the company were to implement this software control system in its manufacturing?operations, the use of the software control system would result in an increase of
$ 50,000in its annual fixed costs while the average variable manufacturing cost per door would drop by$100
PrintDone
Requirement 1.??What is the? company's current breakeven in units and in? dollars?
Begin by identifying the formula to compute the breakeven sales in units using the contribution margin approach.
| ( | Fixed expenses | + | Operating income | ) / |
| = | Breakeven sales in units |
| The breakeven point in units is | units. |
| The breakeven point in dollars is $ | . |
Requirement 2. If the company expects to sell
750
premium garage doors in the upcoming? year, and they do not develop the software control? system, what is its expected operating income from premium garage? doors?
Begin by identifying the formula to compute the operating income.
| Sales revenue | - |
| - | Fixed expenses | = | Operating income |
| If the company expects to sell 750 garage doors, and it does not develop the software control system, its expected | ||
| operating income is $ | . | |
Requirement 3. If the software control system were to be developed and? implemented, what would be the? company's new breakeven point in units and in? dollars?
| The breakeven point in units is | units. |
| The breakeven point in dollars is $ | . |
Requirement 4. If the company expects to sell
750
premium garage doors in the upcoming? year, and it develops the software control? system, what is its expected operating income from premium garage? doors?
| If the company expects to sell 750 garage doors, and it develops the software control system, its expected | ||
| operating income is $ | . | |
Requirement 5. If the company expects to sell
750
premium garage doors in the upcoming? year, do you think the company should implement the software control? system? Why or why? not? What factors should the company? consider?
Yes/no
?,the company
should/should not
implement the software control system. At this level of? sales, implementing the software control system would result in a
higher/lower
operating income. The company should also consider
changes in customer satisfaction
.
Choose from any list or enter any number in the input fields and then continue to th
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