CVV break even

D Type your answers on this excel sheet and print it out for submission, please also submit an electronic copy to the instructor's email Hound all answers to 2 decimal placet. De not change rows or colums on this spreadsheet. Input areas are in yellow Presented below is Ashton Company's income Statement prepared using absorption conting (Please assume that Ashton Company selfs all unitsit produces Requirement 1: Heplace the two unknown amounts (7) in A and B directed to find the unknown for you will have to complete Requirement. Then, complete the totals on the income statement 14 1 13 20 2 23 31 Ashton Company Income Statement For the Year Ended December 31, 2013 Sales (45,000 units) $450,000 Cost of Goods Sold Direct material variable) $90,000 Direct labor (variable) 78,300 Manufacturing Overhead (med 9500 M6.00 Gross Margin 163,200 Operating Expenses Commissions variable) 27.000 Shipping (variable) 9,000.00 Multiply the HIGHEST digit from the last four digits of your student ID entered above by 1,000 and enter the result here Advertising (fixed) 100,000 Billing med 1.Complete Requirement 2 below and insert result Sales and Administrative staries 60.000 Total Operating Expenses 31 33 2 35 3 17 38 19 Net Operating Income (Loss) Requirement 2: Billing costs for the past 5 years along with total units sold follows: 40 41 42 43 44 45 46 Year 2012 2011 2010 2009 Sales in Units 47,500 44,000 42,000 45,500 Billing Costs $ 6,750 $ 6,300 $ 6,180 $ 6,580 2008 46,000 S 6,600 48 49 50 51 52 53 54 Use the high-low method to calculate the following: a. Variable cost per unit Show your work here: ANSWER 55 b. Total fixed costs (Please use the high point) 52 c. Write out the cost equation for billing costs d. Total billing costs if 45,000 units are sold Insert your answer for requirement 1 in the income statement above in the blank provided for Billing (Unknown B) 58 59 60 51 62 63 04 65 66 67 68 09 70 171 72 73 Selling price per unit is $10 and variable manufacturing overhead is 30 cents per unit. All variable expenses in the company vary in terms of units sold (produced). There was no change in beginning or ending inventories. Ashton's plant has a capacity of 80,000 units per year The company has been operating at loss for several years. Management is studying several possible courses of action to determine what should be done to make next year profitable. Requirement 3: Redo Ashton's 2013 income statement in contribution margin format, showing both a total column and a per unit column in the space provided below. (Hint: Divide the total column by units to get per unit amount) Hint: You will need to calculate the variable and fixed components of Manufacturing Overhead (MOH) and billing. Total Units Amount 45,000 Per Unit $ 450,000.00 $ 10.00 74 75 76 72 7B 79 80 81 62 83 84 85 86 87 88 89 90 91 92 03 94 95 96 97 Sales Variable Costs Direct materials Direct Labor Variable MOH Sales commissions Shipping Variable billing Total Variable Costs Contribution Margin Fixed Costs Fixed MOH Advertising Sales and admn salaries Fixed billing Total Fixed Costs Net Operting Income 99 100 101 102 103 104 105 Requirment 4: Calculate Ashton's current breakeven point in both units and dollars. Show your work. Units: ANSWER Units Dollars: 107 103 100 110 111 112 Dollars 113 114 115 116 Requirements: Multiply the lowest digit (other than zero) from the last four digits of you student ID number by 10,000 and enter for C. below 20.000.00 a. The vice president surgests that the selling price be lowered by 10% and advertising be reduced by She is confident that this action will increase sales to 60,000 units The new selling price price per unit would be The new total advertising would be: 110 130 121 122 123 124 125 126 122 128 129 130 131 132 138 134 135 136 137 130 139 100 161 142 143 b. Prepare a new contribution margin income statement, using the vice president's recommendation. Remember, when volume changes (number of units). total variable costs change proportionately. To get total variable costs, multiply the per unit amounts from Requirement 3 by the new number of units. Total Units Amount 60,000 Per Unit Sales New from above Variable Costs Direct materials Direct Labor Variable MOH Sales commissions Shipping Variable billing Total Variable Costs Contribution Margin Fixed Costs Fixed MOH Advertising New from above Sales and admn salaries Fixed biling Total Fixed Costs Net Operting Income 145 160 SAT 145 149 150 151 152 153 153 154 155 156 157 Requirement 6: a Calculate the degree of operating leverage using the vice-president's proposed income statement above. (2 decimal places) Show your work 158 Answer 159 160 161 152 163 164 165 166 167 168 169 170 b. If sales increase by 10%, operating income will increase by: Percent Dollars