Chapter 5 Homework 7 Required information Part 1 of 2 2 Seve Problem 5-5A (Algo) Contribution margin; income effects of alternative strategies LO C2, A1, P2 (The following information applies to the questions displayed below] Burchard Company sold 44,000 units of its only product for $17.80 per unit this year. Manufacturing and selling the product required $318,000 of fixed costs. Its per unit variable costs follow Direct saterials polets Direct labor Prin References Variable overhead coste Variable selling and administrative costs i $4.90 3.90 0.49 0.29 For the next year, management will use a new material, which will reduce direct materials costs to $1.96 per unit and reduce direct labor costs to $2.34 per unit. Sales, total foxed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change. Management is also considering raising its selling price to $21.36 per unit, which would decrease unit sales volume to 39,600 units Problem 5-5A (Algo) Part 1 Required: 1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the selling price. (Round your answers to 2 decimal places.) Sales price per unit Variable costs per unt Direct material With With new material new material and price increase Help Save & Exit Submit Part 1 of 2 2 points P Mc Graw Hill For the next year, management will use a new material, which will reduce direct materials costs to $1.96 per unit and reduce direct labor costs to $2.34 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change. Management is also considering raising its selling price to $21.36 per unit, which would decrease unit sales volume to 39,600 units. Problem 5-5A (Algo) Part 1 Required: 1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the selling price. (Round your answers to 2 decimal places.) Sales price per unit Variable costs per unit Direct materials Direct labor Variable overhead Variable selling & administrative expenses Variable costs per unit Contribution margin per unit With new material With new material and price increase < Prev 7 8 of 10 Next > Radies volume to 39,600 units. ts eBook Print Problem 5-5A (Algo) Part 2 2. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the new material and (b) using the new material and increasing the selling price. BURCHARD COMPANY Contribution Margin Income Statement eferences Number of units: With new material With new material and 44,000 price increase 39,600