MEMO to CEO Trout Speed Boats, LLC MEMO to CEO To: Carey Wagner, Controller From: Greg Hillson, Director of Sales Date: October 22, Year 4 RE: Carey, Life vests Our life vests are sold for $50. We incur selling costs of $2.50 for each life vest. Greg MEMO to Controller Trout Speed Boats, LLC MEMO to Controller To: Carey Wagner, Controller From: Tim Holland, Production Manager Date: October 23, Year 4 RE: Carey, Life vests This year we are on target to make 1,000 life vests. Our full capacity for the production of these life vests is 4,000 units, so we have lots of room to grow! Direct materials are 80% of prime costs. We should explore other suppliers of these materials for a possible cost savings. Outbound shipping of materials costs $4.50 per life vest. This also might be a cost you can negotiate next year and get reduced. Let me know if you have any questions. Tim Partial Cost-Volume-Profit Table Trout Speed Boats, LLC Life Vests Partial Cost-Volume-Profit Table % Capacity Units Revenues Prime costs Current 0% Production 0 es 0 0 $ 25,000 Selling - variable 0 Shipping - variable 0 Contribution margin 0 Fixed costs 27,000 $(25,000) 27,000 Profits $(27,000) $(52,000) Carey Wagner, Controller for Trout Speed Boats, LLC, is preparing the budget for next year's projected life vest sales and is looking at different cost-volume-profit scenarios. You have been asked to provide Carey with key numbers needed for her analysis. For each item, enter the appropriate amounts in the associated cells using the information provided in the exhibits. If the amount is zero, enter a zero (0). Round all amounts to the nearest whole number. Enter all amounts as positive numbers. Identify the current cost components at full capacity. Item 1. Direct material costs per unit 2. Variable costs per unit 3. Contribution margin per unit (in dollars) 4. Contribution margin ratio (as a percentage) 5. Maximum profit 6. Breakeven point in units 7. Breakeven point in dollars Amount 123 123 123 123 123 123 123