Cascade Company estimated the following variable and fixed cost for the only product it produces Variable Cost Per Unit Fixed Cost Direct Materials $132 30 $ 0 Direct Labor $115 30 $ 0 Factory Overhead $24 50 $264,000 Sales Salaries and Commissions $12 70 $245,000 Advertising $0 $75,000 Travel $0 $39,500 Misc Selling Expenses $6 70 $24,500 Office and Officer Salaries $0 $220,000 Supplies $6 30 $15,000 Misc Administrative Expenses $2 20 $17,000 Required Prepare an estimated Contribution Margin Income Statement for the year ended December 31, 2018 (6,000 units are to be produced and sold) Assume the estimated sales price will be $500 per unit Include one category for variable cost and one category for fixed cost Compute the break even point in units and sales dollars Compute the break even point in units and sales dollars assuming the changed facts below The sales staff will now handle all of the advertising cost and their sales commission will be increased to 10 of every sales dollar Remember, the sales price per unit is $500 The sales staff will also have their fixed salaries decrease by $100,000 All other facts will remain unchanged Which alternative would you select assuming that Cascade will sell at least 5,000 units Why Referring to the original facts what is the sales in units and sales dollars required to generate a 12 Operating Income as a percentage of Sales 10 11 12 Cascade Company Contribution Margin Year Ended December 31, 2012 14 15 16 17 18 19 20 21 22 Operating Income 23 24 25 2 Compute the break even point in units and sales dollars 26 27 29 32 33 34 35 36 3 Compute the break even point in units and sales dollars alternative plan 37 38 39 10 1 72 3 14 1 4 Computation of Operating Income under both plans assuming 5,000 2 units are sold Use one category for variable cost and one category 3 for fixed cost PLAN 1 PLAN 1 PLAN 2 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 11 22 E 28 0 29 30 30 31 32 3 34 24 35 36 37 A B D E F G H J K L M 1 5 2 Sales units and sales dollars required to generate a operating income of 12 of sales 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

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Cascade Company estimated the following variable and fixed cost for the only product it produces: Variable Cost Per Unit Fixed Cost Direct Materials $132.30 $

Cascade Company estimated the following variable and fixed cost for the only product it produces:

	Variable Cost Per Unit	Fixed Cost
Direct Materials	$132.30	$ 0
Direct Labor	$115.30	$ 0
Factory Overhead	$24.50	$264,000
Sales Salaries and Commissions	$12.70	$245,000
Advertising	$0	$75,000
Travel	$0	$39,500
Misc. Selling Expenses	$6.70	$24,500
Office and Officer Salaries	$0	$220,000
Supplies	$6.30	$15,000
Misc. Administrative Expenses	$2.20	$17,000

Required:

Prepare an estimated Contribution Margin Income Statement for the year ended December 31, 2018. (6,000 units are to be produced and sold). Assume the estimated sales price will be $500 per unit. Include one category for variable cost and one category for fixed cost.
Compute the break-even point in units and sales dollars
Compute the break-even point in units and sales dollars assuming the changed facts below:

The sales staff will now handle all of the advertising cost and their sales commission will be increased to 10% of every sales dollar. Remember, the sales price per unit is $500.
The sales staff will also have their fixed salaries decrease by $100,000.
All other facts will remain unchanged.

Which alternative would you select assuming that Cascade will sell at least 5,000 units? Why?
Referring to the original facts; what is the sales in units and sales dollars required to generate a 12% Operating Income as a percentage of Sales?

10 11 12 Cascade Company Contribution Margin Year Ended December 31, 2012 14 15 16 17 18 19 20 21 22 Operating Income 23 24 25 2. Compute the break-even point in units and sales dollars 26 27 29 32 33 34 35 36 3. Compute the break-even point in units and sales dollars - alternative plan 37 38 39 10 1 72 3 14 1 4. Computation of Operating Income under both plans assuming 5,000 2 units are sold. Use one category for variable cost and one category 3 for fixed cost PLAN 1 PLAN 1 PLAN 2 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 11 22 E 28 =0 29 30 30 31 32 3 34 24 35 36 37 A B D E F G H J K L M 1 5. 2 Sales units and sales dollars required to generate a operating income of 12% of sales. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19