Question
Petrako Manufacturing Company makes special filters for the heavy equipment industry. Actually, the company produces and sales between 120,000 and 130,000 units per month (at
Petrako Manufacturing Company makes special filters for the heavy equipment industry. Actually, the company produces and sales between 120,000 and 130,000 units per month (at 85% production capacity) During September 2021 the following selected accounts summary was taken from the accounting records:
Units produced and sales.110,000
Direct Materials per unit is . $ 5
Direct Labor per unit is $ 4
Variable overhead per unit is... $ 1
Variable selling expenses per unit sold $ 3
Total variable costs $13
Fixed costs:
Manufacturing overhead $500,000
General and administrative 200,000
Accordingly, to the production and sales budget for October 2021, the management projected sales of 125,000 units at $30 each.
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prepare a projected Contribution Margin income statement for October 2021, including the contribution margin per unit in dollars of sales and contribution margin ratio (percentage)
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Calculate the break-even point in units and dollars of sales.
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If the fixed costs increase by 20%, What happened to the break-even point in sales and units to be sold?
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If the fixed costs decrease by 10%, What happened to the break-even point in sales and units to be sold?
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If sales increase by 10%, by what amount and percentage will operating income increase?
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How many units must the company produce and sells to earn $1,600,000 in October?
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If the company want a net income (after-tax) of $1,300,000 for October (the company average tax rate is 21%) how many units must will be sold?
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What happened to the break-even in sales and units if Direct Labor costs increase to $5?
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What happened to the break-even point and operating income for October if the company agree with an external contractor to run selling expense (actually variable) for a monthly fixed payment of $300,000? Is a good proposal?
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Petrako has received an offer from Mexican company to buy 10,000 filters at $22 per unit. If Petrakos accepted the proposals the variable selling cost increase to $3.50 per unit (actually is $3), and increase in fixed general and administrative cost of $15,000. This sale would not affect national sales or their costs. Using only financial amounts factors, should Petrakos may be accepting the proposal of Mexican Company?
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