Complete the assigned problems in Microsoft Excel

Problem 7-46 Jupiter Game Company manufactures pocket electronic games. Last year Jupiter sold 25,000 games at CVP Analysis of Changes $25 each. Total costs amounted to $525.000. of which $150,000 were considered fixed Sales Prices and Costs In an attempt to improve its product. the company is considering replacing a component part that has a cost of $2.50 with a new and better part costing $4.50 per unit in the coming year. A new machine also would be needed to increase plant capacity. The machine would cost $18.000 with a useful life of six years and no salvage value. The company uses straight-line depreciation on all plant assets. (Ignore Income taxes.) Required: L. What was Jupiter's break-even point in number of units last year? 2. How many units of product would the company have had to sell in the last year to earn $140,090? 324 Chapter 7 Cost-Volume-Profit Analysis 3. If management holds the sales price constant and makes the suggested changes, how many units of product must be sold in the coming year to break even? 4. If the firm holds the sales price constant and makes the suggested changes, how many units of product will the company have to sell to make the same net income as last year 5. If Jupiter wishes to maintain the same contribution-margin ratio. what selling price per unit of product must it charge next year to cover the increased direct-material cost?Problem 7-49 Cincinn i Tool Company old in general CVP: Multiple Products hardware stores. The company controller. Will Fulton, st received the sales forecast for the com- Changes in ing year for CTC's three products: hedge clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volumes and variable costs over the past two years, and Fulton believes the forecast should be carefully evaluated from a cost-volume-profit viewpoint. The preliminary budget information for 20%2 follows: Weeders Hedge Clippers Leaf Blowers 50 000 50,000 100.000 25 Ex For 20x2. CTC's fixed manufacturing overhead is budgeted at $2.000.000, and the company's fixed selling and administrative expenses are forecasted to be $600.090. CTC has a tax rate of 40 percent. Required: Determine CTC's budgeted net income for 20x2. Assuming the sales mix remains as budgeted. determine how s of each product CTC must sell in order to break even in 20x2. 326 Chapter 7 Cost-Volume-Profit Analysis 3. After preparing the original estimates, management determined that its variable manufacturing cost of leaf blowers would increase by 20 percent, and the variable selling cost of hedge clippers could be expected to increase by $100 per unit. However, management has decided not to change the selling price of either product. In addition, gement has lear I that its leaf blower has been perceived as the best value on the market, and it can expect to ee times as many leaf blowers as each of its other products. Under these circumstances, determine how many units of each product CTC would have to sell in order to break even in 20x2Problem 7-39 Leverage Analysis of Consolidated Industries is studying the addition of a new valve to its product line. The valve would be Operating Change used by manufacturers of irrigation equipment. The company anticipates starting with a relatively low sales volume and then boosting demand over the next several years. A new salesperson must be hired because Consolidated's current sales force is working at capacity. Two compensation plans are under consideration: Plan A: An annual salary of $22,000 plus a 10% commission based on gross dollar sales Plan B: An annual salary of $66.000 and no commission. Consolidated Industries will purchase the valve for $50 and sell it for $80. Anticipated demand dur- ing the first year is 6.000 units. (In the following requirements, ignore income taxes.) Required: 1. Compute the break-even point in units for Plan A and Plan B. 2. What is meant by the term opening leverage 3. Analyze the cost structures of both plans at the anticipated demand of 6.000 units. Which of the two plans has a higher operating leverage factor 4. Assume that a general economic downturn occurred during year 2, with product demand falling from 6.000 to 5.000 units. Determine the percentage decrease in company net income if Consoli- dated had adopted Plan A. 5. Repeat requirement + for Plan B. Compare Plan A and Plan B. and explain a major factor that underlies any resulting differences. 6. Briefly discuss the likely profitability impact of an economic recession for highly automated man- ufacturers. What can you say about the risk associated with these firms