Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part A Wilson Company sells lawn ornaments (rocks) with university athletic logos. The selling price of each lawn ornament is $25.00. The variable costs associated

image text in transcribed
Part A Wilson Company sells lawn ornaments (rocks) with university athletic logos. The selling price of each lawn ornament is $25.00. The variable costs associated with each lawn ornament are $15.00 and the fixed costs for the company are $100,000 per year. Ignore income taxes. Required 1. How many lawn ornaments does Wilson need to sell in order to break even? 2. Determine the dollar amount of sales that Wilson needs to make to generate a profit of $150,000. 3. Prepare a contribution margin income statement for the year assuming that Wilson sold 25,000 lawn ornaments 4. Calculate the margin of safety in dollars assuming the company expects sales consistent with selling 25.000 lawn ornaments. 5. The company is considering purchasing a machine to automate the production of lawn ornaments. Fixed costs will increase by $50,000 and variable costs will decrease by $7.50 per lawn ornament. Should the company pursue the purchase of the machine? Show calculations to support your decision. Part B Bearcat Paws produces two sizes of Christmas Ornaments. The selling prices and variable costs are as follows: Small Large Selling price per omament $8.00 $20.00 Variable cost permanent 4.00 8.00 The company sells three small Christmas ornaments for every large Christmas ornament. The contribution margin income statement for the year ended December 31, 2015 follows: Sales revenue $225,000 Variable costs 90.000 Contribution margin 135.000 Fixed costs 75.000 560.000 Profit Required 1. Calculate the weighted average contribution margin per unit for Bearcat Paws. 2. Determine the break-even point in units. 3. Determine the number small and the number of large ornaments that would need to be produced at the break- even point

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

The Essentials Of Finance And Accounting For Nonfinancial Managers

Authors: Edward Fields

3rd Edition

0814436943, 9780814436943

More Books

Students also viewed these Accounting questions

Question

Solve the differential equation. dy 16- +8+y=0 2 dx dx

Answered: 1 week ago

Question

5. Describe the main retirement benefits.pg 87

Answered: 1 week ago

Question

5. Explain how ERISA protects employees pension rights.pg 87

Answered: 1 week ago