Delta Manufacturing Co.

Scenario: Cost Structure Analysis

• Cost Category Breakdown:
  • Production Costs:
    • Fixed Costs: $200,000
    • Variable Cost per Unit: $15
• Distribution Costs:
  • Fixed Costs: $100,000
  • Variable Cost per Unit: $8

Requirements:

1. Cost Behavior Analysis:
   • Classify each cost category (Production Costs and Distribution Costs) as fixed or variable based on the provided breakdown.

1. Total Cost Calculation:
   • Calculate the total cost for Delta Manufacturing Co. at the activity levels of 30,000 units and 40,000 units using marginal costing principles.

1. Contribution Margin Analysis:
   • Compute the contribution margin per unit and contribution margin ratio for Delta Manufacturing Co. based on the cost structure breakdown.

1. Break-Even Analysis:
   • Perform a break-even analysis to determine the number of units and sales revenue needed for Delta Manufacturing Co. to break even, considering marginal costing insights.

1. Sales Mix and Profitability Analysis:

Analyze the sales mix to identify the optimal product mix that maximizes Delta Manufacturing Co.'s overall contribution margin, applying marginal costing concepts.