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MBA 6315 Problem A (20 points): Salution: Please place your answer and supporting calculations in the space below and either highlight your final answer or surround it with a border so that it can be easily identified by the grader. Rabo Arms Company sold 25,000 units of its only product and incurred a $21,200 lass ignoring taxes) for the current year as shown here. During a planning session for year 2019's activities, the productions manager notes that variable costs will increase 2%. However, several energy saving upgrades will allow the company to decrease its annual fixed costs by $54,000. The maximum output capacity of the compeny is 60,000 units per year. 1 Break-Even Point in Dollar Sales for 2018: Robo Arms Company Contribution Margin Income Statement For the Year Ending December 31, 2018 2 Predicted Break-Even Point in Dollar Sales for 2019: $ 1,596,000 1.117200 Sales Variable Costs Contribution Margin Fixed Costs Pre-Tax Loss 478,800 500.000 121.2001 3 Farcasted Contribution Margin Income Statement for 2019: Required: 1 Compute the break-even point in dollar sales for year 2018. (2 points) 4 Sales level required in Dollars for 2019 to earn target pretax income: Compute the predicted break-even point in dollar sales for year 2019 assuming the 2% variable cost increase and the upgrades leading to the foxed cost decrease were made. Abo assume no change occurs in the unit selling price. (Round all numbers to the nearest dollar) (3 points) 3 Prepare a forecasted contribution margin income statement for 2019 that shows the expected results with the new cost structure. Assume that the unit seline price and the number of units sold will not change, and no income taxes will be due. 15 points) 4 Compute the sales level required in both dollars and units to eam $492,000 of target pretax Income in 2019 with the upgrades comaleted, the variable cast increase, and no change in unit sales price. Round all numbers to the nearest dollar and to whole units 15 points) S Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part 4. Assume no Income taxes will be due. (5 points) Sales level required in Units for 2019 to earn target pretax income: Check Figures: Item 3: Pre-Tax Income - $10,456; Item 5: Contribution Margin-$938,000 5 Forecasted Contribution Margin Income Statement at Sales Level computed In Item 4