Question I have is for Managerial Accounting.

Chapter 6: Techniques for Measuring Fixed and Variable Costs 29 6.3 Omers Incorporated Omers Incorporated is a car manufacturer that has been in business for over 60 years. The head office and manufacturing plant is located in Windsor, Ontario. The company currently manufactures a full lineup of vehicles, which includes three models of sedans, one sport utility vehicle, one minivan, and two pickup trucks. From time to time, the models are overhauled to have a new look; however, the lineup has stayed relatively stable over the last few years. It is now October 4, 20X4, and you are an accountant working in the strategic planning department for the sedans. At the end of every third quarter, the company does a financial review on the sedans. Your boss, Nancy Huang, has asked you to help prepare for the review of the sedan models. A lot of information must be gathered before a thoughtful analysis can be produced. The information you provide will be just one part of a much larger analysis. She has provided you with limited information to get you started, found in Exhibit 1 Required Nancy Huang has asked you to prepare a detailed analysis considering each of the following items. With (a) What is the contribution margin of each model? Under the current sales mix, how many of each (b) What is the margin of safety and the degree of operating leverage for each model? Include an inter (c) How many more sedans would have to be sold to increase overall profit by 20% with a 40% tax rate? your report, provide a list of any limitations in your analysis. model would be required to break even? pretation of your findings. 30 Canadian Managerial Accounting Cases EXHIBIT 1 -SEDAN COST INFORMATION TO DATE Total Number of cars sold 6,825,000,000 4,777,500,000 819,000,000 341,250,000 273,000,000 614,250,000 192,500 6,352,500,000 4,764,375,000 889,350,000 197,562,750 508,200,000 (6,987,750) 655,000 19,777,500,000 14,821,875,000 2,566,350,000 651,012,750 6,600,000,000 Direct materials 858,000,00o 112,200,000 594,000,000 (244200,000) Administrative costs Income (loss) 363,062,250 Moon Total Number of cars sold 167,375 7,029,750,000 4,780,230,000 913,867,500 421,785,000 421,785,000 200,200 6,606,600,000 4,822,818,000 924,924,000 264,264,000 528,528,000 66,066,000 324,000 7,128,000,000 5,559,840,000 869,616,000 71,280,000 598,752,000 28,512,000 691,575 Direct materials 15,162,888,000 2,708,407,500 757,329,000 1,549,065,000 586,660,500 Administrative costs Total Number of cars sold 84,113 7,201,194,000 5,328,883,560 993,764,772 200,841,301 618,107,160 29,596,907 353,160 69,500,000 5,982 530,400 932,342,400 755,491 22,703,439,000 16,492,339,710 2,840,115,267 696,287,626 1,725,826,245 948,870,152 Direct materials 5,180,925,750 914,008,095 471,696,225 606,022,560 787,191,405 132,081,840 Total to Date Total Number of cars sold 513,988 977,160 21,497-520,000 16,822,370,400 2,659,958,400 21,587,475,00020,1 20,160,294,000 63,245,289,000 46,477,102,710 8,114,872,767 2,104,629,376 4,650,091,245 1,898,592,902 14916,076,560 2,808,038,772 Direct materials 14,738,655,750 2,616,875,595 1,141,938,525 1,166,481,225 1893,523,905 1,684,835,460 88,675,157 1,798,774,560 (83,606,160) costs Income (loss) Notes: 1. Labour and maintenance are mixed costs (both fixed and variable costs) costs are fixed