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there is no sales given thats why i was having trouble 207. lronShapenslron (ISI) Company manufactures decorative iron railings. In preparing for next year's operations,
there is no sales given thats why i was having trouble
207. lronShapenslron (ISI) Company manufactures decorative iron railings. In preparing for next year's operations, management has developed the following estimates: Current 2019 data Total Per Unit terials. $200,000 $10.00 $50,000 $2.50 Direct labor (variable) Manufacturing overhead: Variable..$70,000 3.50 Selling & administrative: Fixed....$30,000 S1.50 This year, ISI earned a profit of 470,000 based on the data above. Required: Compute the following items: a. Prepare a contribution margin format income statement using the above data. b. Unit contribution margin and contribution ratio. c. Break-even in dollar sales. e. If the sales volume increases by 20% with no change in total fixed expenses, what will be the change in net operating income? f. If the per unit variable production costs increase by 15%, and if fixed selling and administrative expenses increase by 12%, what will be the new break-even point in dollar sales? g. The marketing manager is considering raising the price by 10%. If this reduces sales volume by 15%, what is the new break even point in dollars. h. Using the information from g, how many sales dollars will ISI need to earn 470,000. Please assess whether ISI should follow the marketing manager's advice i. The production manager is considering the purchase of a new automation machine that will reduce the needed direct labor by 50%. However, the machine will add 30,000 of fixed expenses. How many extra units will ISI need to sell to breakeven compared to the current 2019 data? If sales stays the same in the future as 2019, should ISI follow the production manager's advice? Are there any risks doing so Step by Step Solution
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