Arden Inc. manufactures and sells Speed-ies, a fast moving recreational vehicle. Speed-ies are sold at RV...
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Arden Inc. manufactures and sells "Speed-ies", a fast moving recreational vehicle. "Speed-ies" are sold at RV retail stores and at some department stores at a price of $4000 per "Speed-ie" unit. The 2020 actual average cost per unit for "Seed-ies", based on the actual 2020 production and sales volume of 5,000 "Speed-ies", is provided below: Manufacturing costs per unit: Direct Materials Direct Labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing costs per unit $ 1270.00 740.00 330.00 760.00 Nonmanufacturing costs per unit: Variable shipping costs Variable selling commissions and marketing costs Fixed marketing & administrative costs Total nonmanufacturing costs per unit Total cost per unit $140.00 150.00 120.00 $3,510.00 $3,100.00 1. Compute the following: (a) What is Arden Inc's breakeven point in annual sales dollars? $ 410.00 Assume that each of situation described in each question below is independent of the others. Unless stated otherwise, assume that the cost behavior patterns, selling price, and production and sales volume will continue into the future. Assume decision makers are rational profit maximizers. (b) Assume an income tax rate of 25% on pretax operating income, at what level of annual sales volume in units of "Speed-ies" would Arden Inc. achieve an annual aftertax profit (aka net income) of $4,000,000? (c) If Arden's 2021 sales volume is 20% higher than in 2020, then what will their pretax operating income level be in 2021? Arden Inc. manufactures and sells "Speed-ies", a fast moving recreational vehicle. "Speed-ies" are sold at RV retail stores and at some department stores at a price of $4000 per "Speed-ie" unit. The 2020 actual average cost per unit for "Seed-ies", based on the actual 2020 production and sales volume of 5,000 "Speed-ies", is provided below: Manufacturing costs per unit: Direct Materials Direct Labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing costs per unit $ 1270.00 740.00 330.00 760.00 Nonmanufacturing costs per unit: Variable shipping costs Variable selling commissions and marketing costs Fixed marketing & administrative costs Total nonmanufacturing costs per unit Total cost per unit $140.00 150.00 120.00 $3,510.00 $3,100.00 1. Compute the following: (a) What is Arden Inc's breakeven point in annual sales dollars? $ 410.00 Assume that each of situation described in each question below is independent of the others. Unless stated otherwise, assume that the cost behavior patterns, selling price, and production and sales volume will continue into the future. Assume decision makers are rational profit maximizers. (b) Assume an income tax rate of 25% on pretax operating income, at what level of annual sales volume in units of "Speed-ies" would Arden Inc. achieve an annual aftertax profit (aka net income) of $4,000,000? (c) If Arden's 2021 sales volume is 20% higher than in 2020, then what will their pretax operating income level be in 2021?
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Answer rating: 100% (QA)
a To calculate Arden Incs breakeven point in annual sales dollars we need to determine the number of units that need to be sold to cover all costs Bre... View the full answer
Related Book For
Accounting for Decision Making and Control
ISBN: 978-1259564550
9th edition
Authors: Jerold Zimmerman
Posted Date:
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