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Kerrigan Garage Doors manufactures a premium garage door. Currently, the price and cost data associated with the premium garage door are as follows: a (Click
Kerrigan Garage Doors manufactures a premium garage door. Currently, the price and cost data associated with the premium garage door are as follows: a (Click the icon to view the dam.) If the company were to implement this software control system in its manufacturing operations, use of the software control system would result in an increase of $72,000 in its annual xed costs while the average variable manufacturing cost per door would drop by $160. Read the muirements. Data table Requirement 1. What is the company's current breakeven point in units and in dollars? (Round your answers to the nearest whole number Begin by identifying the formula to compute the breakeven sales in units using the contribution margin approach. Average selling price per premium garage door . . 1,500 ( Fixed expenses + Operating income )+ Contribution margin per unit = Breakeven sales in units Average variable manufacturing cost per door . . 700 Average variable selling cost per door 260 The breakeven point In unlS Is units. Total annual xed costs 224,000 Kerrigan Garage Doors has undertaken several sustainability projects over the past few years Management is currently evaluating whether to develop a comprehensive software control system for its manufacturing operations that would signicantly reduce scrap and waste generated during the manufacturing process. Requirements 1. What is the company's current breakeven point in units and in dollars? 2. If the company expects to sell 400 premium garage doors in the upcoming year, and it does not develop the software control system, what is its expected operating income from premium garage doors? 3. If the software control system were to be developed and implemented. what would be the company's new breakeven point in units and in dollars? 4. If the company expects to sell 400 premium garage doors in the upcoming year, and it develops the software control system, what is its expected operating income from premium garage doors? 5. If the company expects to sell 400 premium garage doors in the upcoming year, do you think the company should implement the software control system? Why or why not? What factors should the company consider
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