Calibri () 11 . A A Aa abc AA B I U abe X2 x - A Y A E A Practice Problems 1. (from Cost Management, 2, Eldenburg and Wolcott) Snowbird Snowboards converts regular snowboards by adding outriggers and seats so that people who use wheelchairs can snowboard. The income statement for last year appears below. Units produced, 500 Revenue $150,000 Variable production costs $60,000 Fixed production costs 25,000 Variable selling & administration 10,000 + Fixed selling & administration Operating Income 35,000 130,000 $ 20,000 A. How many converted snowboards must be sold to earn operating income (profit before tax) of $30,000?+ B. Snowbird's regular supplier can provide only 500 snowboards for the upcoming year. Snowbird has been paying $85 for each snowboard (the cost of the snowboards is part of the variable production cost), and their regular supplier is willing to sell them the snowboards at the same price this year. More expensive snowboards can be purchased from other manufacturers. If Snowbird's managers expect to sell more than 500 converted boards, what is the most they can pay a supplier for each additional snowboard? C. If Snowbird pays the price calculated in B for additional snowboards, and sells 200 more converted snowboards than they sold last year, how much more operating income will they earn than last year? D. Now, suppose that Snowbird can only buy 400 snowboards from its regular supplier, and 100 snowboards from a different supplier for $150 each. By how much will they need to raise the unit selling price for ALL boards in order to earn the same operating income they had last year? +#