PART 1 4 Fixed and Varlable Cost Determinations Unit Cost Calculations 5 6 7 8 The projected cost of a lamp is calculated based upon the projected increases or decreases to 9 current costs. The present costs to manufacture one lamp are: 10 Lamp Kit Direct Labor $16.0000000 per lamp 2.0000000 per lamp (4 lamps/hr.) 2.0000000 per lamp 10.0000000 per lamp (based on normal capacity of 25,000 lamps) 11 22 Variable Overhead: 23 24 Fixed Overhead: 33 $30.0000000 per lamp 34 Cost per lamp: 35 36 Expected increases for 20x2 37 When calculating projected increases round to TWO ($0.00) decimal places. 46 1. Material Costs are expected to increase by 2.50% 47 48 2 Labor Costs are expected to increase by 2.50% 49 50 3. Variable Overhead is expected to increase by 4.50 % 59 60 4 Fixed Overhead is expected to increase to $290,000. 61 62 63 to $44,000. 5. Fixed Administrative expenses are expected to increa 72 6 Variable selling expenses (measured on a per lamp basis) are expected to increase by 4.50% 73 74 75 76 7 Fixed selling expenses are expected to be $25,000 in 20x2 85 8. Variable administrative expenses (measured a per lamp basis) are expected to increase by 2.00% 86 87 88 On the following schedule develop the following figures: 89 1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp. 98 99 2- 20x2 Projected Variable Unit Cost per lamp. 100 101 3- 20x2 Projected Fixed Costs. 102 111 I See The Light, Inc Schedule of Projected Costs 5 7 8 Variable Manufacturing Unit Cost 9 Projected Percent Increase 20x2 Cost Rounded to 2 20x1 Cost Decimal Places 10 (4.01) 11 Lamp Kit (4.02) 12 Labor (4.03) 22 Variable Overhead 23 (4.04) 24 Projected Variable Manufacturing Cost Per Unit 25 26 36 37 Total Variable Cost Per Unit 20x2 Cost Rounded to 2 Projected 20x1 Cost Decimal Places Percent Increase 38 (4.05) 39 Variable Selling 14.06) 40 Variable Administrative (4.04) 50 Projected Variable Manufacturing Unit Cost 51 52 (4.07) 53 Projected Total Variable Cost Per Unit 54 64 65 66 Scheduie of Fixed Costs Projected Percent Increase 20x2 Cost 20x1 Cost 67 (4.08) 68 Fixed Overhead lamps@) (normal capacity of 78 (4.09) 79 Fixed Selling (4.10) 80 Fixed Administrative 81 (4.11) 82 Projected Total Fixed Costs 92 1 55 6 PART 2 5 Cost Volume Relationships- Profit Planning 7 Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis based on the following assumptions. Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the number of units and then multiply by the selling price per unit. 10 11 12 13 20 1 21 For 20x2 the selling price per lamp will be $45.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? 22 23 24 31 32 33 34 35 Contribution Margin per unit (Round to two places, S##) 42 (5.01) 43 Contribution Margin Ratio (Round to four places,% is two of those places # ##% ) 44 (5.02) 45 46 53 2 For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $20o,000. What would sales in units have to be in 20x2 to reach the profit goal? 54 55 56 57 64 65 66 67 68 75 76 Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) (5.03) 77 6 For 20x2 the selling price per lamp will be $45.00. If the fixed cost increase by $35,000.00 how many lamps must be sold to breakeven? PART 1 4 Fixed and Varlable Cost Determinations Unit Cost Calculations 5 6 7 8 The projected cost of a lamp is calculated based upon the projected increases or decreases to 9 current costs. The present costs to manufacture one lamp are: 10 Lamp Kit Direct Labor $16.0000000 per lamp 2.0000000 per lamp (4 lamps/hr.) 2.0000000 per lamp 10.0000000 per lamp (based on normal capacity of 25,000 lamps) 11 22 Variable Overhead: 23 24 Fixed Overhead: 33 $30.0000000 per lamp 34 Cost per lamp: 35 36 Expected increases for 20x2 37 When calculating projected increases round to TWO ($0.00) decimal places. 46 1. Material Costs are expected to increase by 2.50% 47 48 2 Labor Costs are expected to increase by 2.50% 49 50 3. Variable Overhead is expected to increase by 4.50 % 59 60 4 Fixed Overhead is expected to increase to $290,000. 61 62 63 to $44,000. 5. Fixed Administrative expenses are expected to increa 72 6 Variable selling expenses (measured on a per lamp basis) are expected to increase by 4.50% 73 74 75 76 7 Fixed selling expenses are expected to be $25,000 in 20x2 85 8. Variable administrative expenses (measured a per lamp basis) are expected to increase by 2.00% 86 87 88 On the following schedule develop the following figures: 89 1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp. 98 99 2- 20x2 Projected Variable Unit Cost per lamp. 100 101 3- 20x2 Projected Fixed Costs. 102 111 I See The Light, Inc Schedule of Projected Costs 5 7 8 Variable Manufacturing Unit Cost 9 Projected Percent Increase 20x2 Cost Rounded to 2 20x1 Cost Decimal Places 10 (4.01) 11 Lamp Kit (4.02) 12 Labor (4.03) 22 Variable Overhead 23 (4.04) 24 Projected Variable Manufacturing Cost Per Unit 25 26 36 37 Total Variable Cost Per Unit 20x2 Cost Rounded to 2 Projected 20x1 Cost Decimal Places Percent Increase 38 (4.05) 39 Variable Selling 14.06) 40 Variable Administrative (4.04) 50 Projected Variable Manufacturing Unit Cost 51 52 (4.07) 53 Projected Total Variable Cost Per Unit 54 64 65 66 Scheduie of Fixed Costs Projected Percent Increase 20x2 Cost 20x1 Cost 67 (4.08) 68 Fixed Overhead lamps@) (normal capacity of 78 (4.09) 79 Fixed Selling (4.10) 80 Fixed Administrative 81 (4.11) 82 Projected Total Fixed Costs 92 1 55 6 PART 2 5 Cost Volume Relationships- Profit Planning 7 Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis based on the following assumptions. Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the number of units and then multiply by the selling price per unit. 10 11 12 13 20 1 21 For 20x2 the selling price per lamp will be $45.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? 22 23 24 31 32 33 34 35 Contribution Margin per unit (Round to two places, S##) 42 (5.01) 43 Contribution Margin Ratio (Round to four places,% is two of those places # ##% ) 44 (5.02) 45 46 53 2 For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $20o,000. What would sales in units have to be in 20x2 to reach the profit goal? 54 55 56 57 64 65 66 67 68 75 76 Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) (5.03) 77 6 For 20x2 the selling price per lamp will be $45.00. If the fixed cost increase by $35,000.00 how many lamps must be sold to breakeven