Direct materials Direct labor Variable overhead Fixed manufacturing costs $2,524,000 $5 per unit 5.50 per unit $6 per unit $8.00 per unit $3 per unit $4.50 per unit $1,550,000 t has recommended an introductory unit sales price Creative Ideas' market research departmen of $32. The incremental selling expenses are estimated to sold, regardless of manufacturing method. Irestructions With the class divided into groups, answer the following (a) Calculate the estimated break-even point in annual unit sales of the new product if Creative Ideas Company uses the (I) Capital-intensive manufacturing method. (2) Laborintensive manufacturing method. Company would be indifferent () Deterane he man anatu rones velhmas t which Creative Ideas between the two manufacturing methods. (c) Explain the circumstance under which Creative Ideas should employ each of the two manufactur (CMA adapted) ing methods. Managerial Analysis BVP5-2 The condensed income statement for the Peri and Paul partnership for 2017 is as follows. PERI AND PAUL COMPANY Income Statement For the Year Ended December 31, 2017 Sales (240,000 units) Cost of goods sold Gross proft Operating expenses Selling Administrative Net loss $1,200,000 800,000 400,000 $280,000 150,000 430,000 S (30,000) A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable. Round to nearest unit, dolla, and percentage, where necessary Use the CVP income statement format in computing profits.) (a) Compute the break-even point in total sales dollars and in units for 2017. (b) Peri has proposed a plan to get the partnership "out of the red" and improve its profitability. She feels that the quality of the product could be substantially improved by spending $0.25 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because Direct materials Direct labor Variable overhead Fixed manufacturing costs $2,524,000 $5 per unit 5.50 per unit $6 per unit $8.00 per unit $3 per unit $4.50 per unit $1,550,000 t has recommended an introductory unit sales price Creative Ideas' market research departmen of $32. The incremental selling expenses are estimated to sold, regardless of manufacturing method. Irestructions With the class divided into groups, answer the following (a) Calculate the estimated break-even point in annual unit sales of the new product if Creative Ideas Company uses the (I) Capital-intensive manufacturing method. (2) Laborintensive manufacturing method. Company would be indifferent () Deterane he man anatu rones velhmas t which Creative Ideas between the two manufacturing methods. (c) Explain the circumstance under which Creative Ideas should employ each of the two manufactur (CMA adapted) ing methods. Managerial Analysis BVP5-2 The condensed income statement for the Peri and Paul partnership for 2017 is as follows. PERI AND PAUL COMPANY Income Statement For the Year Ended December 31, 2017 Sales (240,000 units) Cost of goods sold Gross proft Operating expenses Selling Administrative Net loss $1,200,000 800,000 400,000 $280,000 150,000 430,000 S (30,000) A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable. Round to nearest unit, dolla, and percentage, where necessary Use the CVP income statement format in computing profits.) (a) Compute the break-even point in total sales dollars and in units for 2017. (b) Peri has proposed a plan to get the partnership "out of the red" and improve its profitability. She feels that the quality of the product could be substantially improved by spending $0.25 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because