Variable Manufacturing Unit Cost 20x1 Cost 20x2 Cost Rounded to 2 Decimal Places Lamp Kit Labor Variable Overhead $16 $ 2 $ 2 Projected Percent Increase 2% 2 .50% 2 .50% $16.32 $2.07 $2.05 {4.01) (4.02) (4.03) Projected Variable Manufacturing Cost Per Unit $20.44 (4.04) Total Variable Cost Per Unit 20x1 Cost 20x2 Cost Rounded to 2 Decimal Places Projected Percent Increase 2.00% 6.00% Variable Selling Variable Administrative Projected Variable Manufacturing Unit Cost $3.00 $2.00 3.06 2.121 20.44 {4.05) (4.06) (4.04) Projected Total Variable Cost Per Unit 25.62 4.07) Schedule of Fixed Costs 20x1 Cost 20x2 Cost Projected Percent Increase 260,000.00 (4.08) lamps @ ) Fixed Overhead (normal capacity of Fixed Selling Fixed Administrative 41,000.00 62,000.00 (4.09) {4.10) Projected Total Fixed Costs $ 363,000.00 {4.11) 5. For 20x2 the selling price per lamp will be $45.00. If the variable cost decreased by $3.00 a unit how many lamps must be sold to breakeven? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.02) 6. If for 20x2 the selling price per lamp is increased to $48.00 a unit how many lamps must be sold to breakeven? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.03) 7. If for 20x2 the selling price per lamp is decreased to $42.00 a unit how many lamps must be sold to breakeven? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.04) I See The Light Projected Income Statement For the Period Ending December 31, 20x1 $ 1.125,000.00 750.000,00 375,000.00 $ $ 25,000 lamps @ $45.00 Cost of Goods Sold @ $30.00 Grass Profit Selling Expenses: Fixed Variable (Commission per unit) $3.00 Administrative Expenses: Fixed Variable @ $2.00 Total Selling and Administrative Expenses Net Profit 23,000.00 75,000.00 $ 98.000.00 $ 42.000,00 50,000.00 92,000.00 S 190,000.00 185,000.00 I See The Light Projected Balance Sheet As of December 31, 20x1 34.710.00 67 500.00 mmmmmmmmmmmmmllimmmmmmmllim Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets 8,000.00 500 @ $16.00 3000 @ $30.00 90,000.00 200 210.00 $ Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets 20.000.00 6.800.00 13.200.00 213.410 00 $ 54 000,00 54,000.00 Current abilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ 12,000.00 147 410.00 $ 159.410.00 213,410.00 PART 2 Cost Volume Relationships - Profit Planning Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis based on the following assumptions. Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the number of units and then multiply by the selling price per unit. 1. For 20x2 the selling price per lamp will be $45.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? Contribution Margin per unit (Round to two places, S##.##) $19.38 {5.01) Contribution Margin Ratio (Round to four places,% is two of those places ##.##%) 43.07% {5.02) 2. For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $190,000. What would sales in units have to be in 20x2 to reach the profit goal? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) (5.03) 2. For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $190,000. What would sales in units have to be in 20x2 to reach the profit goal? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) (5.03) 3. For 20x2 the selling price per lamp will be $45.00. If the fixed cost increase by $30,000.00 how many lamps must be sold to breakeven? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {5.04)