Question

Chapter 19 Managerial Analysis Discussion Post v Available on Sunday, February 16, 2020 12:00 AM EST Q Group/section restrictions. Must post first. Jordan and Taylor are beginning to understand break-even analysis. Selling price to Yumminess at $10 per tin. The cost is $8 per tin, which includes $6 of direct material and $1.50 of direct labor. Annual manufacturing overhead is estimated at $100,000 for the expected sales of 200,000 tins. Operating expenses are projected to be $80,000 annually. After looking over the costs for manufacturing overhead and operating expenses, you approximate that 85% of manufacturing overhead and 20% of operating expenses are variable costs. They are now discussing options with adjustments to costs and sales. As long as they keep bringing brownies, you keep turning out numbers.

Answer 1

1.

Expected selling units	210000	[200000*105%]
Sales	2100000	[210,000*10]
Less: Expenses
Direct Material	1260000	[210,000*6]
Direct Labor	315000	[210,000*1.5]
Variable manufacturing overheads	89250	[210,000*0.425]
Variable operating expenses	16800	[210,000*0.08]
Fixed manufacturing overhead [100,000*15%]	15000
Fixed operating expenses [80,000*80%]	64000
Advertising expense	40,000
Net Income	299950

2.

Selling price	$9
Less: variable cost per unit	8.005
Contribution margin	$0.995
Fixed costs
Fixed manufacturing overhead [100,000*15%]	15000
Fixed operating expenses [80,000*80%]	64000
Total fixed costs	79000
Break even units [79000/0.995]	$79,397.0
Break even units per month [79397/12]	$6,616.42

3.

Expected selling units	50,000
Sales	450000	[50,000*9]
Less: Expenses
Direct Material	300000	[50,000*6]
Direct Labor	75000	[50,000*1.5]
Variable manufacturing overheads	21250	[50,000*0.425]
Variable operating expenses	4000	[50,000*0.08]
Fixed manufacturing overhead [100,000*15%]	1250	[15000/12]
Fixed operating expenses [80,000*80%]	5333.33	[64000/12]
Net Income	43166.67
Annual income	518000	[43166.67*12]