Zandri Company is considering replacing its existing cutting machine with a new machine that will help reduce its defect rate. Relevant information for the two machines includes the?following:
Zandri Company is considering replacing its existing cutting machine with a new machine that will help reduce its Requirements defect rate. Relevant information for the two machines includes the following: (a) Determine the sales level, in number of units, at which the costs are the same for both machines. Cost Item Existing Machine New Machine (b) Determine the sales level in dollars at which the use of the new machine results in a 20% profit on sales Monthly fixed costs $ 28,000 $ 42,000 (profit/sales) ratio. Variable cost per unit $ 41 $ 36 Sales price per unit $ 52 $ 52 Requirement (a) Determine the sales level, in number of units, at which the costs are the same for both machines. Begin by determining the basic formula that is used to determine the units when the costs are the same for both machines. Existing machine cost New machine cost ( Variable cost per unit x Sales units ) + Monthly fixed costs = ( Variable cost per unit x Sales units ) + Monthly fixed costs Rearranging the formula you determined above, the number of units where costs for both machines are the same is 2800 units. Requirement (b) Determine the sales level in dollars at which the use of the new machine results in a 20% profit on sales (profit/sales) ratio. Begin by determining the profit formula. ( CM ner unit x Sales units ) - Monthly fixed costs ( Sales price ner unit x Sales units ) x Profit percentage Enter your answer in the answer box and then click Check Answer.Zandri Company is considering replacing its existing cutting machine with a new machine that will help reduce its Requirements defect rate. Relevant information for the two machines includes the following: (a) Determine the sales level, in number of units, at which the costs are the same for both machines. Cost Item Existing Machine New Machine (b) Determine the sales level in dollars at which the use of the new machine results in a 20% profit on sales Monthly fixed costs $ 28,000 $ 42,000 (profit/sales) ratio. Variable cost per unit $ 41 $ 36 Sales price per unit $ 52 $ 52 Existing machine cost New machine cost ( Variable cost per unit x Sales units ) + Monthly fixed costs = ( Variable cost per unit x Sales units ) + Monthly fixed costs Rearranging the formula you determined above, the number of units where costs for both machines are the same is 2800 units. Requirement (b) Determine the sales level in dollars at which the use of the new machine results in a 20% profit on sales (profit/sales) ratio. Begin by determining the profit formula. ( CM per unit x Sales units ) - Monthly fixed costs = ( Sales price per unit x Sales units ) x Profit percentage (Do not round until the final calculation, then round your answer up to the nearest whole number.) Rearranging the formula you determined above, the sales level in units at which the use of the new machine results in a 20% profit on sales (profit/sales) ratio is units. Enter your answer in the answer box and then click Check
