Baird Corporation sells hammocks variable costs are $72 each, and the hammocks are sold for $133 each Baird incurs $373,200 of fixed operating expenses annually Required a1 Determine the sales volume in units and dollars required to attain a $66,000 profit a2 Prepare an income statement using the contribution margin format b Baird is considering implementing a quality improvement program The program will require a $10 increase in the variable cost per unit To inform its customers of the quality improvements, the company plans to spend an additional $11,850 for advertising Assuming that the improvement program will increase sales to a level that is 4,500 units above the amount computed in Requirement a , prepare a budgeted income statement using the contribution margin format c Determine the new break even point in units and sales dollars as well as the margin of safety percentage, assuming that the quality improvement program is implemented Do not round intermediate calculations Round your answers to nearest whole number Round Margin of safety answer to 1 decimal place (i e , 0 234 should be entered as 23 4))

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 22, 2024

Baird Corporation sells hammocks; variable costs are $72 each, and the hammocks are sold for $133 each. Baird incurs $373,200 of fixed operating expenses annually.

Required

a1. Determine the sales volume in units and dollars required to attain a $66,000 profit.
a2. Prepare an income statement using the contribution margin format.
b. Baird is considering implementing a quality improvement program. The program will require a $10 increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional $11,850 for advertising. Assuming that the improvement program will increase sales to a level that is 4,500 units above the amount computed in Requirement a, prepare a budgeted income statement using the contribution margin format.
c. Determine the new break-even point in units and sales dollars as well as the margin of safety percentage, assuming that the quality improvement program is implemented.Do not round intermediate calculations. Round your answers to nearest whole number. Round "Margin of safety" answer to 1 decimal place. (i.e., 0.234 should be entered as 23.4))