Cost-Volume-Profit with Multiple Products, Sales Mix Changes, Changes in Fixed and Variable Costs Artistic Woodcrafting Inc. began several years ago as a one-person, cabinet-making operation. Employees were added as the business expanded. Last year, sales volume totaled $850,000. Volum first five months of the current year totaled $600,000, and sales were expected to be $1.6 million for the entire year. Unfortunately, the cabinet business in the region where Artistic is located is competitive. More than 200 cabinet shops are all competing for the same business. Artistic currently offers two different quality grades of cabinets: Grade I and Grade II, with Grade I being the higher quality. The average unit selling prices, unit variable costs, and direct fixed co as follows: Grade I Grade II Required: Grade I Grade II Unit Price $3,400 Grade I 1,600 Common fixed costs (fixed costs not traceable to either cabinet) are $35,000. Currently, for every three Grade I cabinets sold, seven Grade II cabinets are sold. Grade II Unit Variable Cost Note: Round your answers to the nearest whole number. 1. Calculate the number of Grade I and Grade II cabinets that are expected to be sold during the current year. Grade I 224 units 524 units $2,686 1,328 2. Calculate the number of Grade I and Grade II cabinets that must be sold for Artistic to break even. 168 units 392 units Direct Fixed Cost Compute the effect on operating income. 72,241 X Increase $95,000 95,000 3. Artistic can buy computer-controlled machines that will make doors, drawers, and frames. If the machines are purchased, the variable costs for each type of cabinet will decrease by 9%, but fixed cost will increase by $44,000. 165 units Calculate the new break-even point. Assume the machines are purchased at the beginning of the sixth month. Fixed costs for the company are incurred uniformly throughout the year.

Cost:Velume Probt weh Multble Productr, Sales Por Changes, Changes in Fiued and Variabie Cotts competitve, More than 200 cabinet sheps are all competing for the same businesa. Artistic currently ofters tws dMerent evalty grabes of cabinetsi Grade 1 aed Grade It, with Grade 1 baing the higher quality. The average unt seling prices, unit veriable coita, ind direct fined ca ias follins: Cemmon fined costs (fued costh not trectable ts either cabinat) are \$35, 000, Curtantly, far every thiee Grade I cab nets sole, aeven Girade II cabinets are sold: Atequired: Note: Aound your answers to the nearest whole number. 1. Calculate the numper or crade 1 and crade It cabinets that are expected te te sold during the current yeem? Grade 1 units crade II 4 units 2. Calculate the number of Grade t and Grade II cobinets that must be sold fer Artistic to bresk evan Geace 1 unite Grace 11 4 unts 3. Artabe can bur computer-controled mach nes that will make doore, drewers, and frames, if the meckines are purchasd, the veribile conts for each fype of cabintt will decratie by g9e, bur ficed cost will incrase by 444,000 . cempute the effect an iperabing insame. x Calculate the new break-even pent. Assume the machines are purtiased at the beginning ef the sixth month. Fixtd costs for the company are incuired unformiy throughout the yeae Grade: units napd cost wis incieate by 444,900 Campute the iftect an operating incoms: x Grace 1 unita Grade II x units Calieilate the aflect on the compan's evpected profict for the current rear Calsulate the naw bresk twan peint Astume thet ficed cots are incurred unformiy throughout the yesr, Grace I unita Grade II \& unts Trentax poratir wos 2. Prepare a contribution margin incore statemeit using the naw numbers. Aie ds Magurement (2) wth the changed numbers