Question
Gogo Inc. produces and sells projectors and has a relevant range between 1,000 units and 2,000 units per year. Manufacturing overhead costs range from $1,000,000
Gogo Inc. produces and sells projectors and has a relevant range between 1,000 units and 2,000 units per year. Manufacturing overhead costs range from $1,000,000 to $1,250,000 at the low and high ends of the relevant range, respectively. All Gogos products are customized, so it does not keep any inventory. Gogos income tax rate is 25%. The following is Gogos sales and costs information for the month of June:
Sales | $3,000,000 |
Sales units | 1,500 |
Direct materials | $240,000 |
Direct labour | $600,000 |
Manufacturing Overhead | ? |
Variable Operating Expenses | 9.5% of Sales |
Earnings after taxes | $150,000 |
Using the high-low method, calculate:
Please round your calculations to the nearest dollar.
(a) the fixed manufacturing overhead cost: $
(b) the unit variable manufacturing overhead cost: $
(c) the total manufacturing overhead cost for 1,500 units: $
(d) the contribution margin: %
(e) the gross margin: %
(f)the total period costs (operating expenses): $
(g) the fixed period costs (operating expenses): $
(h) the total fixed costs (including both fixed product and fixed period cost): $
Based on the above answers, calculate
(i) the break-even point in units: units
(j) the degree of operating leverage:
(k) the margin of safety in units: units
Calculate:
(l) the sales dollars needed to earn income after taxes of $210,000: $
(m) sales dollars required to yield an after-tax profit of 7.5% of sales: $
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