Question

PLEASE HELP ITS DUE IN 30 MINS

Check my work [The following information applies to the questions displayed below.] This year Burchard Company sold 40,000 units of its only product for $25 per unit. Manufacturing and selling the product required $200,000 of fixed manufacturing costs and $325,000 of fixed selling and administrative costs. Its per unit variable costs follow. Part 1 of 2 Material $ 8.00 Direct labor (paid on the basis of completed units) Variable overhead costs Variable selling and administrative costs 5.00 0.75 1.00 0.50 points 00:26:23 Next year the company will use a new material, which will reduce material costs by 50% and direct labor costs by 60% and will not affect product quality or marketability. Management is considering an increase in the unit selling price to reduce the number of units sold because the factory's output is nearing its annual output capacity of 45,000 units. Two plans are being considered. Under plan 1, the company will keep the selling price at the current level and sell the same volume as last year. This plan will increase income because of the reduced costs from using the new material. Under plan 2, eBook Print References the company will increase the selling price by 20%. This plan will decrease unit sales volume by 10% Under both plans, the total fixed costs and the variable costs per unit for overhead and for selling and administrative costs will remain the same. Problem 05-6A Part 1 Required: 1. Compute the break-even point in dollar sales for (a) plan 1 and (b) plan 2. (Round "per unit answers" to 2 decimal places.)

Answer 1

Per unit : Plan 1 Plan 2 Sales $ 25 $ 30 Less: Variable costs: Material $ 4 4 2 $ $ 2 Direct labor Variable overhead costs Variable S&A costs Total variable costs Contribution margin $ 0.50 $ 7.50 $ 0.50 7.50 $17.50 22.50 Calculation : Plan 2: selling price increase by 20% sales per unit = { $25+ ($25% 20%)] = $25 + $5 $ 30 Plan 14 Plan 2 Material costs reduced by 50%. Material = $8-($88 50%) = $ 8 - $4 = $4 Direct labor reduced by Bo% Direct labor = $5-1 $5 x 60%) = $5 - $3 = $2

Contribution margin = (sales Per Unit - Variable costs per whit) Plan 1: Contribution Margin = $25 $7.50 = $17.50 Plan 2 : Contribution margin = $ 30 - $7.50 = $22.50 Plan 1 Contribution Margin Ratio Choose Numerator : Choose Denominator : Contribution Margin Ratio Contribution Margin Ratio Sales per unit Contribution margin Per unit $ 25 70% & 17.50 reak-even point in dollars Break-even a point in dollars = $ 750,000 Break - even point in dollars choose Numerator : Choose Denominators Contribution Total fixed costs Margin Ratio $ 525,000 70% Plan 2. Contribution Margin Ratio Contribution margin Sales Per unit per unit & 22.50 / $ 30 Break - Even Point in Dollars Total fixed costs contribution Margin Ratio $ 525,000 1/1 75 % Contribution margin Ratio 15) 1 Break-even point in dollars - $ 700,000

Calculation: Total fixed costs = costs & Total fixed costs = = (fixed Manufacturing Fixed S&A costs) $200,000 & $325,000 $525,000