Rosenthal Manufacturing produces and sells three kinds of products: basic, basic plus and premium based on...
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Rosenthal Manufacturing produces and sells three kinds of products: basic, basic plus and premium based on the main material. Information regarding its three models is shown below: Basic Basic Plus Premium Unit 60,000 60,000 80,000 sales mixed Variable cost percentage 2017 is its bad year with a loss for the first time in its history. The company's income statement showcd the following results from selling all three products: net sales $2,000,000; total cost and cxpenses $2,150,000 and net loss $150,000. Costs and expenses consisted of the following: 30% 30% 30% 40% 25% 35% Total Variable Fixed Cost of goods sold Selling expenses Administrative expenses 1,225,000 S300,000 250,000 200,000 $925,000 625,000 375,000 300,000 $2,150,000 100,000 S1,400,000 Total S750,000 Management is considering the following independent alternatives for 2018 1. Increase units selling price 30% with no change in cost and expenses, 2. Change the compensation of sales persons from fixed annual salaries totaling $170,000 to total salaries of $50,000 plus a 6% commission on net sales. 3. Purchased new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 40:60. Instructions 1. Compute the break-even point in dollars and beak-even point in units for 2018 2. Compute the break-even point in dollars under cach of the alternative courses of action. Which course of action do you recommend? 3. If sales increase by 10,000 units (with same sale mixed rate), by how much should net operating income increase? 4. How many units would the company have to sell to attain the target profit of $150,000? 5. What is the company's margin of safety in dollars? Rosenthal Manufacturing produces and sells three kinds of products: basic, basic plus and premium based on the main material. Information regarding its three models is shown below: Basic Basic Plus Premium Unit 60,000 60,000 80,000 sales mixed Variable cost percentage 2017 is its bad year with a loss for the first time in its history. The company's income statement showcd the following results from selling all three products: net sales $2,000,000; total cost and cxpenses $2,150,000 and net loss $150,000. Costs and expenses consisted of the following: 30% 30% 30% 40% 25% 35% Total Variable Fixed Cost of goods sold Selling expenses Administrative expenses 1,225,000 S300,000 250,000 200,000 $925,000 625,000 375,000 300,000 $2,150,000 100,000 S1,400,000 Total S750,000 Management is considering the following independent alternatives for 2018 1. Increase units selling price 30% with no change in cost and expenses, 2. Change the compensation of sales persons from fixed annual salaries totaling $170,000 to total salaries of $50,000 plus a 6% commission on net sales. 3. Purchased new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 40:60. Instructions 1. Compute the break-even point in dollars and beak-even point in units for 2018 2. Compute the break-even point in dollars under cach of the alternative courses of action. Which course of action do you recommend? 3. If sales increase by 10,000 units (with same sale mixed rate), by how much should net operating income increase? 4. How many units would the company have to sell to attain the target profit of $150,000? 5. What is the company's margin of safety in dollars?
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Answer Explanation 1 Weighted average selling price per unit Total sales revenueN... View the full answer
Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
Posted Date:
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