How many tape recorder and electronic calculator units did Hewt Electronics have to sell in 19X7 to break even? 423 Required 2 What volume of sales is required if Hewtex Electronics is to earn a nut income after taxes in 19X8 which is 15% higher than the 19X7 prog after taxes? 3. How many tape recorder and electronic calculator units will Hewten have to sell in 19X8 to break even? (CMA) 14-19 Contribution Margin Calculation for Multiple Products Pralina Prod. ucts Company is a regional firm which has three major product lines cereals, breakfast bars, and dog food. The income statement was prepared by product line using full costing. PRALINA PRODUCTS COMPANY Income Statement For the Year Ended April 30, 19X8 (000 omitted) Breakfast Cereals Bars Dog Food Total Sales in pounds 2,000 500 500 3,00 Revenue from sales $1,000 $400 $200 Cost of goods sold $1,600 Direct materials $ 330 $160 $100 Direct labor 90 40 $ 590 Factory overhead 108 48 20 24 150 Total cost of goods sold $ 528 $248 180 Gross margin $ 472 $144 $152 $ 56 $ 920 Req Operating expenses $ 680 Selling expenses Advertising $ Commissions 50 $ 30 50 $ 20 $ 100 Salaries and related 40 20 110 benefits Total selling expenses 30 20 10 60 General and administrative $ 130 $ 90 $ 50 $ 270 expenses Licenses Salaries and related 50 $ 20 $ 15 $ 85 benefits Total general and 60 25 15 100 administrative expenses Total operating expenses $ 110 $ 45 $ 30 $ 185 Operating income before $ 240 taxes $135 $ 80 $ 455 Other Data $ 232 $ 17 $ (24) $ 225 1 Cost of goods sold The company's inventories of direct materials and finished products do not vary significantly from year to year. Theinventories at April 30, 19X8 were essentially identical to those at s did Hewtex April 30, 19X7. Factory overhead was applied to products at 120% of direct labor to earn a net dollars. The actual factory overhead costs for the 19X7-X8 fiscal year were as follows: e 19X7 profit Variable indirect labor and supplies Variable employee benefits on factory labor $15,000 will Hewtex Supervisory salaries and related benefits 30,000 Plant occupancy costs 35,000 (CMA) 100,000 $180,000 Pralina Prod- duct lines- There was no overapplied or underapplied overhead at year-end. was prepared 2 Advertising The company has been unable to determine any direct causal relationship between the level of sales volume and the level of advertising expenditures. However, because management believes advertising is necessary, an annual advertising program is imple- mented for each product line. Each product line is advertised inde- pendently of the others. 3 Commissions Sales commissions are paid to the salesforce at the rates of 5% on the cereals and 10% on the breakfast bars and dog food Total 4 Licenses Various licenses are required for each product line. These are renewed annually for each product line. 3,000 5 Salaries and related benefits Sales and general and administrative $1,600 personnel devote time and effort to all product lines. Their salaries $ and wages are allocated on the basis of management's estimates of 590 150 time spent on each product line. 180 $ 920 Required 1 The controller of Pralina Products Company has recommended that $ 680 the company do a cost-volume-profit analysis of its operations. As a first step the controller has requested that you prepare a revised income statement for Pralina Products Company that employs product $ 100 contribution margin format which will be useful in cost-volume-profit 110 analysis. The statement should show the profit contribution for each product line and the operating income before taxes for the company as 60 $ 270 a whole. 2 Calculate the breakeven in sales dollars for 19X8. 3 What volume of sales dollars is necessary to achieve a 19X9 operating $ 85 income before taxes 20% higher than in 19X8 assuming the revenue, cost and product mix patterns as in 19X8? (CMA) 100 $ 185 $ 455 14-20 Unit Cost Computation and Breakeven Metal Industries, Inc., oper- ates its production department only when orders are received for one or $ 225 both of its two products, two sizes of metal discs. The manufacturing process begins with the cutting of doughnut-shaped rings from rectan- gular strips of sheet metal; these rings are then pressed into discs. The erials and sheets of metal, each 4 feet long and weighing 32 ounces, are purchased year. The at $1.36 per running foot. The department has been operating at a loss for the past year as shown below