Presented below is Ashton Company's Income Statement prepared using absorption costing:

The Last 4 Digits refered are 7,6,1,3

Requirement 1: Replace the two unknown amounts (?) in A. and B. as directed. To find the unknown for B, you will have to complete Requirement 2. Then, complete the totals on the income statement. Ashton Company Income Statement For the Year Ended December 31, 2013 $450,000 Sales (45,000 units) Cost of Goods Sold Direct materials (variable) Direct labor (variable) Manufacturing Overhead (mixed) $90,000 78,300 98,500 266,800 183,200 Gross Margin Operating Expenses Commissions (variable) Shipping (variable) Advertising (fixed) Billing (mixed) Sales and Administrative salaries Total Operating Expenses 27,000 ? A. Multiply the HIGHEST digit from the last four digits of by 1,000 and enter the result here 100,000 ? B.Complete Requirement 2 below and insert result 60,000 Net Operating Income (Loss) Requirement 2: Billing costs for the past 5 years along with total units sold follows: Year 2012 2011 2010 2009 Sales in Units Billing Costs 47,500 6,750 44,000 $ 6,300 42,000 6,180 45,500 6,580 2008 46,000 6,600 Use the high-low method to calculate the following: Show your work here: ANSWER a. Variable cost per unit b. Total fixed costs (Please use the high point) c. Write out the cost equation for billing costs 011 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] 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) ill need to calculate the variable and fixed components of Manufacturing Overhead (MOH) Total Units Amount 45,000 Per Unit ######## $ 10.00 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 Requirment 4: Calculate Ashton's current breakeven point in both units and dollars. Show your work. Units: ANSWER Units Dollars: Dollars Requirement 5: Multiply the lovest digit (other than zero) from the last four digits of you student ID number by 10,000 and enter for C. belov. a. The vice president suggests that the selling price be lowered by 10% and advertising bereduced 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: 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 Ney from above 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 New from above Requirement 6: a. Calculate the degree of operating leverage using the vice-president's proposed income statement above. (2 decimal places) Show your work Ansver b. If sales increase by 10%, operating income will increase by: Percent Dollars