Problem 20-2A Lorge Corporation has collected the following information after its first year of sales. Sales were $1,200,000 on 120,000 units, selling expenses $250,000 (40% variable and 60% fixed), die and 80% materials $291,400; direct labor $250,000; administrative expenses $270,000 (20% vana ement has fixed); and manufacturing overhead $378,000 (70% variable and 30% fixed). Topm nag cted tha asked you to do a CVP analysis so that it can make plans for the coming year. I unit sales will increase by 10% next year. Compute (1) the contribution margin for the current year and the projected year, a nd (2) the fixed costs for the current year. (Assume that fixed costs will remain the same in the projected Year (1) Contribution margin for current year Contribution margin for projected years (2) Fixed costs for current year Compute the break-even point in units and sal margin ratio to 2 decimal places e.g.o.15 and final answers to o es dollars for the first year. (Round contribution O decimal places, e.g. 2,510.) Break-even point units Break-even point s The company has a target net income of $160,000. What is the required sales in company to meet its target? dollars for the Sales dollars required for target net incomes If the company meets its target net income number, by what percentage could its operating at a loss? That is, what is its margin of safety ratio? (Round answert e.g. 10.5.) sales fall before it is o 1 decimal place, Margin of safety ratio The company is considering a purchase of equipment that would reduce its direct labor costs by $100,000 and would change its manufacturing overhead costs to 30% variable and 70% fixed (assume total manufacturing overhead cost is $ 378,000, as above). It is also considering switching to a pure mission basis for its sales staff. This would change selling expenses to 90% variable and 10% fixed sume total selling expense is $250,000, as above). Compute (1) the contribution margin and (2) the tion margin ratio, and recompute (3) the break-even point in sales dollars. (Round tribution margin ratio to 2 decimal places, e.g. 25.25 and all other answers to O decimal places, e.g. 2,520. Use the current year numbers for calculations.) 1. Contribution margin 2. Contribution margin ratio 3. Break-even point Question Attempts: Unlimited