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The following annual per unit cost data at an activity level of 4,000 units has been provided below. The company produces and sells only one

The following annual per unit cost data at an activity level of 4,000 units has been provided below. The company produces and sells only one product.:

$ Per

Unit

Sales

400.00

Direct labor

18.00

Direct material

22.00

Variable manufacturing overhead

4.00

Fixed manufacturing overhead

20.00

Variable selling expenses

2.00

Fixed selling expenses

5.00

Fixed administrative expenses

3.00

The relevant range is 2,500 - 5,500 units. You will be given facts for three different options. Using the facts given, calculate amounts as directed below. Take each option independent of the others (start with the original information given for each).

You must enter your answer in the following format: $x,xxx

At the current level of activity, calculate the following:

Total sales revenue

Total contribution margin

Total fixed expenses

The company is considering a price reduction approach to increase net income. The company believes that a 10% reduction in sales price will increase volume by 20%. Simultaneously, there will be a change in suppliers for direct material that will result in lowering direct material costs by 15%. Calculate the following:

Total sales revenue

Total contribution margin

Total fixed expenses

The company is also considering an approach that will not alter sales price. The company believes that by laying off non-productive workers they can reduce direct labor to 4% of sales. Combined with a $4,000 increase in advertising per month, they estimate sales will increase 2% over current sales. Calculate the following:

Total sales revenue

Total contribution margin

Total fixed expenses

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