Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Line Required information [The following information applies to the questions displayed below.) This year Burchard Company sold 36,000 units of its only product for $16.20

image text in transcribed
image text in transcribed
image text in transcribed
Line Required information [The following information applies to the questions displayed below.) This year Burchard Company sold 36,000 units of its only product for $16.20 per unit. Manufacturing and selling the product required $121,000 of fixed manufacturing costs and $181,000 of fixed selling and administrative costs. Its per unit variable costs follow. Material Direct labor (paid on the basis of completed units) Variable overhead costs Variable selling and administrative costs 4.10 3.10 0.41 0.21 ... Next year the company will use new material, which will reduce material costs by 70% and direct labor costs by 30% and will not affect product quality or marketability Management is considering an increase in the unit selling price to reduce the number of units sold because the factory's output is nearing its annual output capacity of 41,000 units. Two plans are being considered. Under plan 1, the company will keep the selling price at the current level and sell the same volume as last year. This plan will increase income because of the reduced costs from using the new material. Under plan 2, the company will increase the selling price by 30%. This plan will decrease unit sales volume by 15%. Under both plans 1 and 2. the total fixed costs and the variable costs per unit for overhead and for selling and administrative costs will remain the same. Required: 1. Compute the break-even point in dollar sales for both (a) plan 1 and (b) plan 2. (Round "per unit answers" and "CM ratio" percentage answer to 2 decimal places.) Per unit: Plan 1 Plan 2 Sales Variable Costs: Material Direct labor Variable overhead costs Variable S&A costs Total variable costs Contribution margin Plan 1 Contribution margin ratio Choose Numerator: Choose Denominator: Contribution margin ratio Contribution margin ratio Break-even point in dollars Required information - Contribution margin ratio Break-even point in dollars Choose Numerator: Choose Denominator: Break-even point in dollars Break-even point in dollars Plan 2 Contribution margin ratio Contribution margin ratio Break-even point in dollars Break-even point in dollars

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

Audit Quality Association Between Published Reporting Errors And Audit Firm Characteristics

Authors: Jonas Tritschler

2014 Edition

3658041730, 978-3658041731

More Books

Students also viewed these Accounting questions