Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Here's the question. I've done the income statement. Assume that you are part of the accounting team for Sutcliffe Hardware. The company has only one

Here's the question. I've done the income statement.

Assume that you are part of the accounting team for Sutcliffe Hardware. The company has only one product that sells for $25 per unit. Sutcliffe estimates total fixed costs to be $5,600. Sutcliffe estimates direct materials cost of $6.00 per unit, direct labor costs of $7.50 per unit, and variable overhead costs of $1.50 per unit. The CEO would like to see what the gross margin and operating income will be if 800 units are sold in the next period. Prepare a contribution margin income statement.

Further analysis of Sutcliffe Hardware's fixed costs revealed that the company actually faces annual fixed overhead costs of $5,600 and annual fixed selling and administrative costs of $2,400. Variable cost estimates are correct: direct materials cost, $6.00 per unit; direct labor costs, $7.50 per unit; and variable overhead costs, $1.50 per unit. At this time, the selling price of $25 will not change. Complete the following formulas for the revised fixed costs. Enter the ratio as a percentage.

Assume that the number of units that Sutcliffe sold exceeded the break-even point by one (1).

How much would operating income be?

What would operating income be if the units sold exceeded the break-even point by five (5) units?

Please show me how to get the answer!!

Thank you!!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting A Contemporary Approach

Authors: David Haddock, John Price, Michael Farina

5th Edition

126078035X, 978-1260780352

More Books

Students also viewed these Accounting questions

Question

of $1,518. The The . The 30 to red for a t

Answered: 1 week ago

Question

2. To store it and

Answered: 1 week ago