Cost Velume Probit weh Multple Productt, Sales Mix Changes, Changes in Fued and Veriabie Cots: Artitic Wobderafing toc, began severel yeers ego os a one-person, cabrnit-making cperabisn. Empiopeor ween added as the bueness erpanded. Last year, Leles volume tataled stiso, cob, Vol competitve, Mare than 200 cabinet sheps are all competing for the same busines: Artistic currently ofters two difterent evaity grabes of cabinets Grade 1 aed Grade It, with Grade 1 being the higher quality. The average uni seling prices, unit veriabie coita, and direct fined ca as follows: Blequired: Note: Aound your answers to the nearest whole number. 1. Calculate the numper or Grade 1 and crade If cabinets that are expected to te sold diering the current vear. Grade 1 units Crade If , units 2. Caiculate the number ar Grade t and Grade II cabinets that must be sold fer Artistic to bresk even. Geace I unita Grace 11 r units 3. Artabe can bur computar-controled machnes that will make doprs, dreners, and frames, if the mackires are purchasd, the veriabie coots for each fype of cabintt wil decratie by 97 , but fiked cost will incrase by 944,000 . Comgute the affect on operating inceme: x Calculate the new breek-even pent. Astume the machines are purtiajed ot the beginning et the sixth month. Fixad costs for the campany are incumed unformiy throughout the yeae. Grabe: units 3. Artistic can buy computericontroiled machines that will make doors, drawers, and frames. If the machines are purchased, the variabie costs for each type of cabinet will decre fixed cost will incresse by $44,000. Compute the effect on operating income. x Calculate the naw break-even point, Assume the machines are purchased at the beginning of the sixth month. Fixed costs for the cornpany are incurred uniformly througheut the Grade 1 units Grade II x units 4. Refer to the original data. Artistic is considering adding a retail outlet. This will increase common fixed cost by $70,000 per year. As a result of adding the retail outlet, the add emphasis an quality will allow the firm to change the sales mix to 1 t1. The retail outlot is also expected to increase soles by 30%. Assume that the outlet is opened at the beginni Calculate the effect on the company's expected profiti for the current year: Calculate the new break-even point. Assume that fixed costs are incurred uniformly throughout the year. Grade 1 v unitz Grade II unit: f notack: roter ur wos 1. Let X be a package of 3 Grade I cabinets and 7 Grade II cabinets. 5 et up an equstion for total sales equal to 0.30(53,400) for Grade I and 0.70($1,600) for Grade II. 3, Prepare a contritution margin income statement using the new numbers. 4. Re-do Requirement (2) with the changed numbers
