Carey Wagner, Controller for Trout Speed Boats, LLC, is preparing the budget for next year's projected life vest sales and is looking at different cost-volume-profit scenarios. You have been asked to provide Carey with key numbers needed for her analysis. For each item, enter the appropriate amounts in the associated cells using the information provided in the exhibits. If the amount is zero, enter a zero (0). Round all answers to the nearest whole number. Enter all amounts as positive numbers. Identify the cost components as directed below. Info given: This year we are on target to make 1,000 life vests. Our full capacity for the production of these life vests is 4,000 units, so we have lots of room to grow! Direct materials are 80% of prime costs. We should explore other suppliers of these materials for possible cost savings. Outbound shipping of materials costs $4.50 per life vest. This also might be a cost you can negotiate next year and get reduced.

Our life vests are sold for $50. We incur selling costs of $2.50 for each life vest. Prime costs = $25000, Fixed costs = $27000 , CM = -25,000 Questions to answer:

1. If sales levels equal 2,000 units, what is the profit?

2. If profits are targeted at $27,000,

a) what are targeted sales in units?

b) what are targeted sales in dollars?

3. If prime costs - direct materials are decreased by 10%,

a) what is the new breakeven point in units?

b) what is the new breakeven point in dollars?

c) what is the maximum profit?

Answer rating: 100% (QA)

1 If sales level equal to 2000 units The profit will be Per unit Tota... View the full answer