Question: Colson Productions provides the data below relating to its single product for 2019: Selling price per unit $50 Variable manufacturing costs per unit $24 Annual

Colson Productions provides the data below relating to its single product for 2019:

Selling price per unit $50

Variable manufacturing costs per unit $24

Annual fixed manufacturing costs $500,000

Variable marketing, distribution and administration costs $8 per unit

Annual fixed non-manufacturing costs $256,000

Annual volume 48,000 units

Calculate

(i) Contribution margin per unit

(ii) Break Even point in units and sales dollars for 2019

(iii) Compute margin using the following table

Revenue

Less Variable Costs

= Contributing Margin

Less Fixed Costs

= Profit

(iv) The firm is considering changes in plant operations and production processes in 2020. The changes would result in a reduction of variable costs per unit of $6 and increase fixed manufacturing costs by $265,000. How many units would need to be sold to earn the same profit as in 2019? Would you recommend the changes? Why?

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