Cost Volume Relationships - Profit Planning Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analyss based on the following assumptions Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to up to the next complete unit. F number of units and then multiply by the selling price per unit. round urthuremore, to find the required sales in dollars it may be easier to find the 1. For 20x2 the selling price per lamp will be $45,.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? (5.01) Contribution Margin per unit (Round to seven places. S## #####) 5.02) Contribution Margin Ratio (Round to seven places,% is two of those places ss ###%) 2. For 20x2 the selling price per lamp will be $45.00. How many lamps must be sold to breakeven? 5.03) Breakeven sales in units (Round up to zero places. #### units) 3. For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $264,000. What would sales in units have to be in 20x2 to reach the profit goal? Sales in units (Round up to zero places, e units) (5.04) 4. For 20x2 the selling price per lamp will be $45.00. The company would like to have a net income equal to 29 00% of sales. If that is to be achieved, what would be the sales in units in 20m Sales in units (Round up to zero places, ###m# units) (6 01) If the company believed that it could only sell 25,000 lamps, what would the new selling price have to be so that the new contrbution margin per unit is equal to last years contribution margin per unit? 5. (6 02) New Selling Price (Round up to two places S###### ## ) For 20x2 the selling price per lamp will be $A a net income of $260,000 6. 6.03) Sales in units (Round up to zero places. ###### units) 7. If the company believes that the demand will be 27,500 units for the year. What selling price per lamp. rounded to two places, would generate a net income of $823,500 6.04) New selling pnce per larp (Round up to two places. S###,##### ) Page 2 I See The Light Projected Income Statement For the 20x1 Period Ending December 3t. $ 1,125.000.00 723.250.00 25.000 lamps$45 00 $ 401,750.00 Coet of Goods Sold $ 23,000 00 Commission per unt) &s3 15 78,75000 $101,750.00 $42,000 00 Evenses 008 10000 ,50000 145.250.00 500.00 Net Prot l See The Light Projected Balance Sheet As of December 31, 20x1 Curent Asses $ 34,710.00 67,500.00 Accounts Receivable 500g $9.20 500 $1.25 4,600.00 625.00 Fgurines Eectrical Sets Work in Process Finished Goods 3000 B $28.93 86,790.00 194,225.00 Total Curent Assets Faed Assets Equipment Total Faxed Assets Total Assets 680000 13.200.00 s 20,000.00 6,800.00 S 207.425.00 Curent Liabiites Accounts Payable S 54,000.00 $ 54,000.00 Stookhoiders Equity Common Stock Retained Eamings Total Stockholder's Equity Total Liabilites and Stbckholders Equity $ 12.000.00 141.425.00 153,425.00 207 425 The projected cost of a lamp is calculated based upon the projected increases or decreases to current costs. The present costs to manufacture one lamp are: Figurines Electrical Sets Lamp Shade Direct Labor Variable Overhead: Fixed Overhead $9.2000000 per lamp 1.2500000 per lamp 6.0000000 per lamp 2.2500000 per lamp (4 lamps/hr.) 0.2250000 per lamp 10.0000000 per lamp (based on normal capacity of 25,000 lamps) Cost per lamp r lan Expected increases for 20x2 When calculating projected increases round to SEVEN decimal places,$0.0000000 1 Material Costs are expected to increase by 5 00% 2. Labor Costs are expected to increase by 6.00%. 3. Variable Overhead is expected to increase by 4.50% 4. Fixed Overhead is expected to increase to $285,000. 5. Fixed Administrative expenses are expected to increase to $60,000. 6. Vaniable selling expenses (measured on a per lamp basis) are expected to increase by 350% 7. Fixed selling expenses are expected to be $37,000 in 20x2. 8. Variable administrative expenses (measured a per lamp basis) are expected to increase by 6 5096. On the following schedule develop the following figures: 1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp. 2- 20x2 Projected Variable Unit Cost per lamp. 3 20x2 Projected Fixed Costs. Cost Volume Relationships - Profit Planning Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analyss based on the following assumptions Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to up to the next complete unit. F number of units and then multiply by the selling price per unit. round urthuremore, to find the required sales in dollars it may be easier to find the 1. For 20x2 the selling price per lamp will be $45,.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? (5.01) Contribution Margin per unit (Round to seven places. S## #####) 5.02) Contribution Margin Ratio (Round to seven places,% is two of those places ss ###%) 2. For 20x2 the selling price per lamp will be $45.00. How many lamps must be sold to breakeven? 5.03) Breakeven sales in units (Round up to zero places. #### units) 3. For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $264,000. What would sales in units have to be in 20x2 to reach the profit goal? Sales in units (Round up to zero places, e units) (5.04) 4. For 20x2 the selling price per lamp will be $45.00. The company would like to have a net income equal to 29 00% of sales. If that is to be achieved, what would be the sales in units in 20m Sales in units (Round up to zero places, ###m# units) (6 01) If the company believed that it could only sell 25,000 lamps, what would the new selling price have to be so that the new contrbution margin per unit is equal to last years contribution margin per unit? 5. (6 02) New Selling Price (Round up to two places S###### ## ) For 20x2 the selling price per lamp will be $A a net income of $260,000 6. 6.03) Sales in units (Round up to zero places. ###### units) 7. If the company believes that the demand will be 27,500 units for the year. What selling price per lamp. rounded to two places, would generate a net income of $823,500 6.04) New selling pnce per larp (Round up to two places. S###,##### ) Page 2 I See The Light Projected Income Statement For the 20x1 Period Ending December 3t. $ 1,125.000.00 723.250.00 25.000 lamps$45 00 $ 401,750.00 Coet of Goods Sold $ 23,000 00 Commission per unt) &s3 15 78,75000 $101,750.00 $42,000 00 Evenses 008 10000 ,50000 145.250.00 500.00 Net Prot l See The Light Projected Balance Sheet As of December 31, 20x1 Curent Asses $ 34,710.00 67,500.00 Accounts Receivable 500g $9.20 500 $1.25 4,600.00 625.00 Fgurines Eectrical Sets Work in Process Finished Goods 3000 B $28.93 86,790.00 194,225.00 Total Curent Assets Faed Assets Equipment Total Faxed Assets Total Assets 680000 13.200.00 s 20,000.00 6,800.00 S 207.425.00 Curent Liabiites Accounts Payable S 54,000.00 $ 54,000.00 Stookhoiders Equity Common Stock Retained Eamings Total Stockholder's Equity Total Liabilites and Stbckholders Equity $ 12.000.00 141.425.00 153,425.00 207 425 The projected cost of a lamp is calculated based upon the projected increases or decreases to current costs. The present costs to manufacture one lamp are: Figurines Electrical Sets Lamp Shade Direct Labor Variable Overhead: Fixed Overhead $9.2000000 per lamp 1.2500000 per lamp 6.0000000 per lamp 2.2500000 per lamp (4 lamps/hr.) 0.2250000 per lamp 10.0000000 per lamp (based on normal capacity of 25,000 lamps) Cost per lamp r lan Expected increases for 20x2 When calculating projected increases round to SEVEN decimal places,$0.0000000 1 Material Costs are expected to increase by 5 00% 2. Labor Costs are expected to increase by 6.00%. 3. Variable Overhead is expected to increase by 4.50% 4. Fixed Overhead is expected to increase to $285,000. 5. Fixed Administrative expenses are expected to increase to $60,000. 6. Vaniable selling expenses (measured on a per lamp basis) are expected to increase by 350% 7. Fixed selling expenses are expected to be $37,000 in 20x2. 8. Variable administrative expenses (measured a per lamp basis) are expected to increase by 6 5096. On the following schedule develop the following figures: 1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp. 2- 20x2 Projected Variable Unit Cost per lamp. 3 20x2 Projected Fixed Costs