Midwest Manufacturing Statement of Income 2016 2017 2018 Sales $ 5,625,357 $ 5,794,118 $ 6,141,765 Cost of Goods Sold: Variable Costs 1,462,593 393,775 1,390,588 1,781,112 Fixed Costs 521,471 368,506 Total Cost of Goods Sold 1,856,368 1,912,059 2,149,618 Gross Profit 3,992,147 3,768,989 3,882,059 Administrative & Selling Expenses: Variable Administrative & Selling Costs Fixed Administrative & Selling Costs 393,775 521,471 522,050 956,311 1,100,882 1,013,391 Total Administrative Costs 1,350,086 1,622,353 1,535,441 $ 2,418,904 $ 2,259,706 $ 2,456,706 Net Income Supplemental Information 2016 2017 2018 Unit Costing Summary: Units Sold 100,453 107,298 118,111 Direct Labor Hours 75,340 75,109 76,772 1)What is the (a) breakeven in units and (b) margin of safety in units for (i) 2016, (ii) 2017, and (ii) 2018? (25 Points) A new piece of manufacturing equipment is being considered for purchase. This machine is projected to reduce total cost of goods sold by 18 % (based on 2018 actual results) and have a useful life of 5 years. 2) If the machine costs $2,500,000 should it be purchased? Explain. (20 Points) The company has calculated that 40 % of the variable cost of goods sold are attributable to direct materials, and that 60% of the variable cost of goods sold are associated with direct labor. 3) What is the direct materials cost per item for 2018? (10 Points) It is projected that the number of units sold for 2019 will increase by 5 % from 2018. No change in inventory is scheduled for 2019: 4) What is the production budget, in units, for 2019 in units? (10 Points) It is expected that the cost of direct materials will increase by 3% from 2018 to 2019. 5) What is the direct materials budget, in dollars, for 2019? (15 Points) 6) What was the direct labor hours per unit for (rounded to the nearest .01) (i) 2017 and (i) 2018? (15 Points) It is budgeted that the direct labor hours per unit from 2018 will be the same for 2019. It is also budgeted that the direct labor rate for 2019 will increase by 2 % from 2018. What is the direct labor budget, in dollars, for 2019? (15 Points) 7) When drafting the budget for 2018 the standard hourly rate was set at $12.56 for direct labor. What is the direct labor rate variance for 2018? (15 Points) 8) Midwest Manufacturing Statement of Income 2016 2017 2018 Sales $ 5,625,357 $ 5,794,118 $ 6,141,765 Cost of Goods Sold: Variable Costs 1,462,593 393,775 1,390,588 1,781,112 Fixed Costs 521,471 368,506 Total Cost of Goods Sold 1,856,368 1,912,059 2,149,618 Gross Profit 3,992,147 3,768,989 3,882,059 Administrative & Selling Expenses: Variable Administrative & Selling Costs Fixed Administrative & Selling Costs 393,775 521,471 522,050 956,311 1,100,882 1,013,391 Total Administrative Costs 1,350,086 1,622,353 1,535,441 $ 2,418,904 $ 2,259,706 $ 2,456,706 Net Income Supplemental Information 2016 2017 2018 Unit Costing Summary: Units Sold 100,453 107,298 118,111 Direct Labor Hours 75,340 75,109 76,772 1)What is the (a) breakeven in units and (b) margin of safety in units for (i) 2016, (ii) 2017, and (ii) 2018? (25 Points) A new piece of manufacturing equipment is being considered for purchase. This machine is projected to reduce total cost of goods sold by 18 % (based on 2018 actual results) and have a useful life of 5 years. 2) If the machine costs $2,500,000 should it be purchased? Explain. (20 Points) The company has calculated that 40 % of the variable cost of goods sold are attributable to direct materials, and that 60% of the variable cost of goods sold are associated with direct labor. 3) What is the direct materials cost per item for 2018? (10 Points) It is projected that the number of units sold for 2019 will increase by 5 % from 2018. No change in inventory is scheduled for 2019: 4) What is the production budget, in units, for 2019 in units? (10 Points) It is expected that the cost of direct materials will increase by 3% from 2018 to 2019. 5) What is the direct materials budget, in dollars, for 2019? (15 Points) 6) What was the direct labor hours per unit for (rounded to the nearest .01) (i) 2017 and (i) 2018? (15 Points) It is budgeted that the direct labor hours per unit from 2018 will be the same for 2019. It is also budgeted that the direct labor rate for 2019 will increase by 2 % from 2018. What is the direct labor budget, in dollars, for 2019? (15 Points) 7) When drafting the budget for 2018 the standard hourly rate was set at $12.56 for direct labor. What is the direct labor rate variance for 2018? (15 Points) 8)