Question
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!!
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