Please answer question 3-50
ult's Woodwork Company mala . Walt's carpenters make the shelves in the only s rented building. Walt has a separate office at another locations also includes a showroom where customers can view sample shelves and questions of salespeople. The company sells all the shelves it produces ead year and keeps no inventories. The following information pertains to hive, Woodwork Company for the past year. a. Units produced and sold b. Sales price per unit 50,000 c. Carpenter labor to make shelves 570 d. Wood to make the shelves 600,000 450,000 e. Sales staff salaries 80.000 f. Office and showroom rental expenses 150,000 g. Depreciation on carpentry equipment 50.000 h. Advertising 200.000 i. Sales commissions based on number of units sold 180,000 j. Miscellaneous fixed manufacturing overhead 150,000 k. Rent for the building where the shelves are made 300,000 1. Miscellaneous variable manufacturing overhead 350,000 m. Depreciation for office equipment 10,000 Required Make appropriate assumptions about cost behavior and assume that direct labor costs vary died with the number of units produced. How many units must the company sell in order to cam app tax profit of $500,000? LO 2, 3 3-50 Introducing a new product, profitability Santos Company is considering introducing a new compact disc player model at a price of $105 per unit Santos's controller has compiled the following incremental cost Chapter 3 Using Costs in Decision Makingnew product: information based on an estimate of 120,000 units of sales annually for the Direct materials cost $3,600,000 Direct labor cost $2,400,000 Variable manufacturing overhead $1,200,000 Sales commission 10% of sales Fixed cost $2,000,000 The sales manager expects the introduction of the new model to result in a reduction in sales of the existing model from 300,000 to 240,000 units. The contribution margin for the existing model is $20 per unit. ne the total impact on Santos's profit from the introduction of the new model. Santos introduce the new model? Explain. 3-51 Cost behavior and cost classifications Shannon O'Reilly is trying to decide whether to continue to take public transportation to work or to purchase a car. Before making her decision, she would like to compare the cost of using public transportation and the cost of driving a car. ctivity measure should Shannon use as she estimates the cost of driving? hould Shannon view as incremental (variable or out-of-pocket) costs of driving from o work? are some fixed costs of driving a car? on purchased a car, she would use it to take a 2-week scenic vacation by ate her vacation and lodging expenses
