RadCliff Inc manufactures and sells a single product. Current sales are 8,000 units per year. Data for the current year is reflected below: Selling Price per unit $80 per unit Manufacturing Costs Direct Materials $12 per unit Direct Labor $8 per unit Variable Overhead $4 per unit Fixed Overhead $240,000 per year Non-Manufacturing Costs Variable Selling and Administrative 4.00% of sales Fixed Selling and Administrative $215,000 per year REQUIREMENT A: Calculate the current net operating income or loss (if loss, enter as a negative) Calculate the annual units required to break-even Calculate the annual dollar margin of safety (to 2 decimal places) What is the meaning of your answer from requirement 3 above? Calculate the annual margin of safety percentage (to 2 decimal places) What is the meaning of your answer from requirement 5 above? Calculate the number of units requred to attain a target annual profit of $220,000 Since the company is not doing very well (as your calculations from requiremen A show), the company has come up with the following proposals to improve profitability: Reduce the selling price by $3.00 per unit Carry out more targeted advertising. This will increase the fixed selling expenses by $20,000 Use a new supplier of direct materials. Direct material costs will decrease by 40% If the above three chages are implemented, management believes that unit sales will increase by 25% from the current level. REQUIREMENT B: Calculate the current net operating income or loss (if loss, enter as a negative) Calculate the annual units required to break-even Calculate the annual dollar margin of safety (to 2 decimal places) What is the meaning of your answer from requirement 3 above? Calculate the annual margin of safety percentage (to 2 decimal places) What is the meaning of your answer from requirement 5 above? Calculate the number of units requred to attain a target annual profit of $220,000 REQUIREMENT C: On the fourth column below where it asks for the "type of change", please indicate whether the change from current operations to proposed operations is "good" or "bad". For example, if profit increases, that is a "good" change.

RadCliff Inc manufactures and sells a single product. Current sales are 8,000 units per year. Data for the current year is reflected below: Selling Price per unit $80 per unit Manufacturing Costs Direct Materials $12 per unit Direct Labor $8 per unit Variable Overhead $4 per unit Fixed Overhead $240,000 per year Non-Manufacturing Costs Variable Selling and Administrative 4.00% of sales Fixed Selling and Administrative $215,000 per year REQUIREMENT A: 1. Calculate the current net operating income or loss (if loss, enter as a negative) 2. Calculate the annual units required to break-even 3. Calculate the annual dollar margin of safety (to 2 decimal places) 4. What is the meaning of your answer from requirement 3 above? 5. Calculate the annual margin of safety percentage (to 2 decimal places) 6. What is the meaning of your answer from requirement 5 above? 7. Calculate the number of units requred to attain a target annual profit of $220,000 Since the company is not doing very well (as your calculations from requiremen A show), the company has come up with the following proposals to improve profitability: Reduce the selling price by $3.00 per unit Carry out more targeted advertising. This will increase the fixed selling expenses by $20,000 Use a new supplier of direct materials. Direct material costs will decrease by 40% If the above three chages are implemented, management believes that unit sales will increase by 25% from the current level. REQUIREMENT B: 1. Calculate the current net operating income or loss (if loss, enter as a negative) 2. Calculate the annual units required to break-even 3. Calculate the annual dollar margin of safety (to 2 decimal places) 4. What is the meaning of your answer from requirement 3 above? 5. Calculate the annual margin of safety percentage (to 2 decimal places) 6. What is the meaning of your answer from requirement 5 above? 7. Calculate the number of units requred to attain a target annual profit of $220,000 REQUIREMENT C: On the fourth column below where it asks for the "type of change", please indicate whether the change from current operations to proposed operations is "good" or "bad". For example, if profit increases, that is a "good" change. REQUIREMENT A REQUIREMENT B TYPE OF (Current Operations) (Proposed Changes) CHANGE CHANGE 1. Annual units to attain break-even 2. Dollar Margin of Safety (MOS) Bad 3. Meaning of MOS Good 4. Margin of Safety Percentage (MOS%) 5. Meaning of MOS % 6. Net Operating Income 7. Annual units to attain a target profit of $220,000