In Year 1, Jay Company expects to sell 2,243 units at $110 per unit. Sales are expected to increase 25% each year for years 2-4. The unit sales price will remain the same. Labor is 23% of sales, Overhead 10%, Materials 5%, and Variable Sales and Admin, 4%. Fixed Costs are Factory Overhead (2%) and Sales and Admin (4%) of year 1 sales. Annual interest expense is $425. The company tax rate is 20%. 

a) Create the Sales Budget for the 4-year period.

b) Calculate the variable cost per unit based on the cost given.

c) Create a budgeted income statement for the 4-year period, using all the information provided and calculated. 

d) Calculate the CM ratio, Unit CM, Breakeven in units, Breakeven in dollars for the total 4-year period.

e) If sales remain at the budgeted 4-year level, but fixed costs increase to $367,800, and the company wants to achieve target net income of $ $700,000, recalculate the CM ratio, Unit CM, Breakeven in units, Breakeven in dollars, and Target Breakeven in Units. 

f) Create a breakeven chart for Jay Company based on unit increments of 250 and the revised fixed costs of $367,800. (Hint: You want to graph sales, fixed costs and total costs (total variable and fixed) on one scatter plot.) 

Answer rating: 100% (QA)

a Sales Budget for 4year period Year 1 Year 2 Year 3 Year 4 Units 2243 2804 3505 4381 Sales Price 11... View the full answer