jetson co. sold 19,600 units of its only product and incurred a $46,568 loss (ignoring taxes) for the current year as shown here. during a planning session for year 2012's activities, the production m

Project Description:

jetson co. sold 19,600 units of its only product and incurred a $46,568 loss (ignoring taxes) for the current year as shown here. during a planning session for year 2012's activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. to obtain these savings, the company must increase its annual fixed costs by $146,000. the maximum output capacity of the company is 40,000 units per year.

jetson company
contribution margin income statement
for year ended december 31, 2011

sales -------------------$727,160
variable costs-----------581,728
__________
contribution margin------145,432
fixed costs--------------192,000
__________
net loss-----------------$(46,468)

1. compute the break-even point in dollar sales for year 2011.(round your intermediate calculations to 2 decimal places and final answer to nearest dollar amount)

2. computer the predicted break-even point in dollar sales for year 2012 assuming the machine is installed and there is no change in the unit sales price.(round your intermediate calculations to 2 decimal places and final answer to nearest dollar amount.)

3. prepare a forecasted contribution margin income statement for 2012 that show the expected results with the machine installed. assume that the unit sales price and the number of units sold (19,600 units) will not change, and no income taxes will be due.

jetson company
forecasted contribution margin income statement
for year ended december 31, 2012

sales------------$ ?
variable cost-----?
contribution margin---?
fixed costs----------?
net income-----------?

4. computer the sales level required in both dollars and unit to earn $112,000 of after-tax income in 2012 with the machine installed and no change in the unit sales price. assume that the income tax rate is 30%(round your intermediate calculations to 2 decimal places and always round up(ceiling rounding)your final answer to the next whole number.)

sales level required in dollars $ ?
sales level required in units ?

5. prepare a forecasted contribution margin income statement that show the result at the sales level computed in part 4. assume an income tax rate of 30%(use the units in your answer from part 4 in your calculation of sales and variable cost. your net income might be higher than required amount due to rounding. input all amounts as positive values. round your answers to the nearest dollar amount.)

jetson company
forecasted contribution margin income statement
for year ended decemeber 31, 2012

sales-----------------$?
variable cost------------?
contribution margin--------------?
fixed cost---------------?
?-----------------------?
?---------------------------?
net income-------------------------?
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