EZ Print LTD. produces and sells printing products across Canada. Last year, sales volume totaled $850,000....

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EZ Print LTD. produces and sells printing products across Canada. Last year, sales volume totaled $850,000. Volume for the 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 printing business in the region where EZ Print is located is extremely competitive. More than 100 printing shops are all competing for the same business. The company currently manufactures one type of high-quality printer with the average unit selling prices, unit variable costs, and direct fixed costs are as follows: Budgeted Costs $ Unit Sales Price 5,000 Direct Labour/Unit 1,386 Direct Materials/Unit 1,433 Variable Mfg. OH/Unit 1,195 Depreciation 150,000 Insurance Expense 50,000 Salaries Expense Rent Expense 10,000 15,000 Required: 1) Calculate the following: a. Number of printers that are expected to be sold during the current year b. number of printers that must be sold for EZ Print to break even c. sales dollars in order to break even d. generate a graph which plots the break even analysis 2) EZ Print can buy machines that will make the majority of the printer parts. If the company chooses to purchase the machines, the variable costs will decrease by 8% but the fixed costs will increase by $52,000. The plan would be to purchase the machine at the beginning of July. Fixed costs for the company are incurred equally throughout the year. Calculate the following: a. impact on operating income b. new number of printers to break even c. sales dollars to break even 3. EZ Print is considering the option of opening a new retail outlet which will increase salaries by $40,000; insurance by $10,000 and rent expense by $30,000 per year. This is expected to increase sales by 25 percent and the plan would be to open this up at the beginning of July (half way through the upcoming year). Calculate the following: a. Impact on EZ Print's expected profits for the year b. new break even point in quantity of printers C. new break even point in sales dollars 4. Write a memo to the CFO of EZ Print discussing your recommendations from both question 2 & 3 above. Discuss both quantitative and qualitative factors in your recommendation. New Paper Product Amy Lewis is the Director of Marketing for EZ Print, and is producing a sales forecast for a new line of paper products. The divisional manager has been gathering data so that he can choose between two different production processes. The first process would have a variable cost of $10 per case produced and total fixed cost of $100,000. The second process would have a variable cost of $6 per case and total fixed cost of $200,000. The selling price would be $30 per case. Amy had just completed a marketing analysis that projects annual sales of 30,000 cases, however she is reluctant to report the 30,000 forecast to the divisional manager. She knows that the first process would be labor intensive, whereas the second would be largely automated with little labor and no requirement for an additional production supervisor. If the first process is chosen, Sam Adams, a good friend, will be appointed as the line supervisor. If the second process is chosen, Sam and an entire line of laborers will be laid off. After some consideration, Amy revises the projected sales downward to 22,000 cases. She believes that the revision downward is justified. Since it will lead the divisional manager to choose the manual system, it shows a sensitivity to the needs of current employees-a sensitivity that she is afraid her divisional manager does not possess. He is too focused on quantitative factors in his decision making and usually ignores the qualitative aspects. 5. Based on the above information, calculate the following: a. Break even point in units for each process b. The sales volume at which the two processes have the same profitability as eachother c. The range of sales that the automated process is more profitable than the manual process d. The range of sales that the manual process is more profitable than the automated process 6. Write a memo to the Divisional Manager discussing Amy's decision to alter the sales forecast. Discuss whether Amy acted ethically and if her decision was justified. Provide a recommendation on which alternative the Manager should select and discuss both the quantitative and qualitative factors related to the decision. EZ Print LTD. produces and sells printing products across Canada. Last year, sales volume totaled $850,000. Volume for the 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 printing business in the region where EZ Print is located is extremely competitive. More than 100 printing shops are all competing for the same business. The company currently manufactures one type of high-quality printer with the average unit selling prices, unit variable costs, and direct fixed costs are as follows: Budgeted Costs $ Unit Sales Price 5,000 Direct Labour/Unit 1,386 Direct Materials/Unit 1,433 Variable Mfg. OH/Unit 1,195 Depreciation 150,000 Insurance Expense 50,000 Salaries Expense Rent Expense 10,000 15,000 Required: 1) Calculate the following: a. Number of printers that are expected to be sold during the current year b. number of printers that must be sold for EZ Print to break even c. sales dollars in order to break even d. generate a graph which plots the break even analysis 2) EZ Print can buy machines that will make the majority of the printer parts. If the company chooses to purchase the machines, the variable costs will decrease by 8% but the fixed costs will increase by $52,000. The plan would be to purchase the machine at the beginning of July. Fixed costs for the company are incurred equally throughout the year. Calculate the following: a. impact on operating income b. new number of printers to break even c. sales dollars to break even 3. EZ Print is considering the option of opening a new retail outlet which will increase salaries by $40,000; insurance by $10,000 and rent expense by $30,000 per year. This is expected to increase sales by 25 percent and the plan would be to open this up at the beginning of July (half way through the upcoming year). Calculate the following: a. Impact on EZ Print's expected profits for the year b. new break even point in quantity of printers C. new break even point in sales dollars 4. Write a memo to the CFO of EZ Print discussing your recommendations from both question 2 & 3 above. Discuss both quantitative and qualitative factors in your recommendation. New Paper Product Amy Lewis is the Director of Marketing for EZ Print, and is producing a sales forecast for a new line of paper products. The divisional manager has been gathering data so that he can choose between two different production processes. The first process would have a variable cost of $10 per case produced and total fixed cost of $100,000. The second process would have a variable cost of $6 per case and total fixed cost of $200,000. The selling price would be $30 per case. Amy had just completed a marketing analysis that projects annual sales of 30,000 cases, however she is reluctant to report the 30,000 forecast to the divisional manager. She knows that the first process would be labor intensive, whereas the second would be largely automated with little labor and no requirement for an additional production supervisor. If the first process is chosen, Sam Adams, a good friend, will be appointed as the line supervisor. If the second process is chosen, Sam and an entire line of laborers will be laid off. After some consideration, Amy revises the projected sales downward to 22,000 cases. She believes that the revision downward is justified. Since it will lead the divisional manager to choose the manual system, it shows a sensitivity to the needs of current employees-a sensitivity that she is afraid her divisional manager does not possess. He is too focused on quantitative factors in his decision making and usually ignores the qualitative aspects. 5. Based on the above information, calculate the following: a. Break even point in units for each process b. The sales volume at which the two processes have the same profitability as eachother c. The range of sales that the automated process is more profitable than the manual process d. The range of sales that the manual process is more profitable than the automated process 6. Write a memo to the Divisional Manager discussing Amy's decision to alter the sales forecast. Discuss whether Amy acted ethically and if her decision was justified. Provide a recommendation on which alternative the Manager should select and discuss both the quantitative and qualitative factors related to the decision.