Questions related to cost behavior: 1. Case Exhibit 4 presents individual costs at two levels of production/sales: 1,200 units and 1,900 units. For each cost, indicate whether it is a VC, a FC, or a mixed cost (MC) that contains both a variable and fixed component. Questions related to cost-volume-profit analysis: 1. For each cost in Exhibit 3, indicate whether the cost is a manufacturing or nonmanufacturing cost. . Assume the company expects to produce and sell 1,500 units during the following month at a price of $100 per unit. Prepare a functional income statement that shows predicted revenues and costs. Prepare a contribution margin (CM) statement that shows predicted revenues, costs, and profit before tax. . Assume the company prices its product at $100. What is the CM per unit? . Assume the company prices its product at $100. How many units does it need to sell per month to break even? . Assume the company sells 800 units. What is the price it must set on its product to break even? . The owners have set a target profit of $25,000 per month ($300,000 per year) in order for them to decide to devote themselves full time to JW Sports Supplies. Realizing from their projected income statements that their current predictions fall short of the $25,000, they want to evaluate the impact of alternative actions. Specifically, they want to evaluate each of the following factors, separately (in doing so, assume all other factors stay the same as projected in the income statement): a. What price must the company set to achieve a profit of $25,000? b. What must the VC per unit be to achieve a profit of $25,000? c. How many units must it sell to achieve a profit of $25,000? d. What must total monthly FCs be to achieve a profit of $25,000? . The company is considering making a deluxe model. Its price would be $156, and its VC per unit would be $100, compared to a price of $100 and a VC of $60 for the basic model. It anticipates a sales mix of 60% basic model and 40% deluxe model. How many units of the basic model and how many units of the deluxe model must the company sell to break even? 10f3 RWERSI&'IIA:Y DARDEN UVA-C-2402 4 . Rev. Feb. 6, 2020 Business Publishing C JW Sports Supplies (A) James Jones and William West had worked out together almost daily for several years. Both were professionals pursuing demanding careers, and both saw exercise as an escape from the daily stresses of the workplace. While they continued to update their workout wardrobes to take advantage of the latest in apparel technology, they lamented the lack of the perfect gym bag each time they met at the gym. One day, it was that lack of good storage space for their sneakers; the next, it was the lack of a pocket to conveniently store their phones, keys, and other small necessities; and finally, it was the problem of the seams splitting far beyond what one would consider normal wear and tear. Jones and West were sure they couldn't be the only ones who found current gym bags inadequate in meeting their needs. Eventually, they decided to pursue a venture to make what they considered the ideal gym bag, one that would incorporate the features they both desired and that would be of a sufficient quality to withstand a regular workout schedule for several vears. They each made a modest investment to start their new company]J]W Sports Suppliesand began operating on the side while they continued their respective professional careers. That had been more than five years ago. The company had grown substantially, had achieved annual sales of over $1.5 million, and had begun to generate a healthy profit (Exhibit 1 provides an income statement for the most recent year of operation). As Jones and West reflected on their success to date, they contemplated what might be possible if they could devote themselves full time to JW Sports Supplies. They decided to dive deeper into the numbers. They wanted to better understand the impact that alternative decisions they could make about managing costs, changing prices, and different sales volumes would have on the company, so that they could better determine whether pursuing their venture full time was even a possibility. They both agreed that if they could see annual profit climb to around $300,000, they would consider making this a full-time endeavor. The two owners decided to begin their analysis by gaining a better understanding of the costs being incurred to produce and sell the gym bags. They gathered some data to help them in their analysis. First, they compiled data on actual total costs and number of gym bags produced and sold per month for the past 24 months (see Exhibit 2). They noted that they typically only produced the gvm bags once they had an order; they were averse to tying up cash in inventory, and pursuing this strategy meant that units produced and sold were the same each month. Second, they compiled detailed data on costs by category for 2 of the 24 months (see Exhibit 3 for a description of each cost category, and Exhibit 4 for costs by category). They could have gathered this information for all 24 months, but they decided to start with just 2 months to keep their analysis more manageable. Taught by Jihad Al Okaily, from 1-Jan-2024 to 30-Jun-2024. Order ref F503661. ermitted only within these parameters. This POF may not be reproduced, stored in a retrieval system, or uploaded to any LLM (e.g. ChatGPT). Purchased for use on the ACCT 552, at King Fahd University of Petroleum & Minerals.