The company is considering a purchase of equipment that would reduce its direct labor costs by...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The company is considering a purchase of equipment that would reduce its direct labor costs by $110,000 and would change its manufacturing overhead costs to 30% variable and 70% fixed (assume total manufacturing overhead cost is $343,000, as above). It is also considering switching to a pure commission basis for its sales staff. This would change selling expenses to 90% variable and 10% fixed (assume total selling expense is $250,000, as above). Compute (1) the contribution margin and (2) the contribution margin ratio, and recompute (3) the break-even point in sales dollars. (Round contribution margin ratio to 2 decimal places, e.g. 25.25 and all other answers to 0 decimal places, e.g. 2,520. Use the current year numbers for calculations.) 1. Contribution margin %24 2. Contribution margin ratio 3. Break-even point 24 The company is considering a purchase of equipment that would reduce its direct labor costs by $110,000 and would change its manufacturing overhead costs to 30% variable and 70% fixed (assume total manufacturing overhead cost is $343,000, as above). It is also considering switching to a pure commission basis for its sales staff. This would change selling expenses to 90% variable and 10% fixed (assume total selling expense is $250,000, as above). Compute (1) the contribution margin and (2) the contribution margin ratio, and recompute (3) the break-even point in sales dollars. (Round contribution margin ratio to 2 decimal places, e.g. 25.25 and all other answers to 0 decimal places, e.g. 2,520. Use the current year numbers for calculations.) 1. Contribution margin %24 2. Contribution margin ratio 3. Break-even point 24
Expert Answer:
Answer rating: 100% (QA)
1 Contribution margin Sales S900000 Variable costs Direc... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
The Super Muench Cookie Company is considering a diversification effort that would move it into small retail outlets at major malls around the country. Currently, Super Muench has a capital structure...
-
The Maxim Packing Company is considering a freight consolidation program for serving the Kansas market. The program would involve the small-volume customers located at Hays, Manhattan, Salina, and...
-
E-prescriptions system Medical System is a critical system that can be used to make processes more accessible and more efficient however it is a confidential system due to the patient information...
-
Identify the five number summary for the following data set: 35 24 54 2 36 23 16 43 59 55 28 81
-
An epoxy matrix is reinforced with 40 vol% E-glass fibers to produce a 2-cm- diameter composite that is to withstand a load of 25,000 N. Calculate the stress acting on each fiber. The elastic modulus...
-
Root Products is considering acquiring a manufacturing plant. The purchase price is $900,000. The owners believe the plant will generate net cash inflows of $300,000 annually. It will have to be...
-
The CBS News station in New York City often obtains opinions by interviewing neighbors of a person who is the focus of a news story. Identify which of these types of sampling is used: random,...
-
Registration at Southern University has always been a time of emotion, commotion, and lines. Students must move among four stations to complete the trying semiannual process. Last semesters...
-
Regarding the steaks product line. What is the net advantage or disadvantage (change in total company pre-tax profits) of continuing sales of steaks? Should the company be concerned about losing...
-
Koho Ltd. produces handheld portable televisions. The normal selling price is $400 and its unit production cost is $264 as detailed below: Direct Materials Direct labour Manufacturing overhead $143 $...
-
For a single, isolated point charge carrying a charge of q= 41.2 pC, one equipotential surface consists of a sphere of radius r = 25.9 mm centered on the point charge as shown. What is the potential...
-
Financial Leverage Flicks EBIT is this year is $100,000. They paid $20,000 in interest and $30,000 in Dividends. The tax rate is 25%. What is their DFL?
-
Bob, a widower who is 6 5 years old, has correctly calculated his taxable income for 2 0 2 1 as follows: Employment income under subdivision a . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1...
-
A 1 5 - year mortgage for $ 3 7 0 , 0 0 0 with an interest rate of 5 . 1 % . ( HINT: You should first create and complete the TVM data table to compute the monthly payment. Then, this monthly payment...
-
A division of the Gibson Corporation manufactures bicycle pumps. Each pump sells for $ 1 0 , and the variable cost of producing each unit is 6 0 % of the selling price. The monthly fixed costs...
-
The Rick Sanchez Corp recently reported $4,678,000 of sales, $3,740,500 of operating costs other than depreciation, and $450,2200 of depreciation. The company had $533,250 of outstanding bonds that...
-
A car traveling at 120km/h passes through the intersection, headed north, at 9:50. At 9:53, a train passes the intersection at 90km/h, headed east. How fast is the distance between the car and train...
-
Marc Company assembles products from a group of interconnecting parts. The company produces some of the parts and buys some from outside vendors. The vendor for Part X has just increased its price by...
-
Construct a relative frequency distribution for the 2000 cars with a class width of 2, where the first class has a lower limit of 15.
-
Music sales: In recent years, sales of digital music ( downloads) have been increasing, while sales of physical units ( CDs, cassettes, and others) have been declining. The following table presents...
-
Pay your taxes: Among all the state income tax forms filed in a particular state, the mean income tax paid was p = $2000 and the standard deviation was a = $500. As part of a study of the impact of a...
-
Renaldo borrows $8,000 from his aunt today to help pay for college expenses. He agrees to repay the loan according to the following schedule, at a rate of 6 percent/year compounded annually. a. Draw...
-
Ken loans his grandson Rex $20,000 at 5.5 percent per year to help pay for executive chef schooling in Florida. Rex requires 3 years of schooling before beginning to earn a salary. He agrees to pay...
-
An investment has the following cash flow series where interest is 5 percent: a. Determine the present worth of the series. b. Determine the future worth of the series at the end of year 8. c. Find...
Study smarter with the SolutionInn App