Homework Answers
| Current (No Automation | Proposed (Automation) | |||
| 82000 Units (A) | 129000 Units (D) | |||
| Production &Sale Volume | Per unit (B) | Total (C= A*B) | Per unit (E) | Total (F= D*E) |
| sales Revenue | 95 | 7790000 | 95 | 12255000 |
| Variable cost | ||||
| Direct Material | 19 | 1558000 | 19 | 2451000 |
| Direct Labor | 15 | 1230000 | 12* | 1548000 |
| Variable Manufacturing Overhead | 10 | 820000 | 10 | 1290000 |
| Total variable Manufacturing Cost | 44 | 3608000 | 41 (Balancing fig) | 5289000 |
| Contribution Margin | 51 | 4182000 | 54 | 6966000 |
| Fixed Manufacturing cost | 1080000 | 2200000 | ||
| Net Operating Income | 3102000 | 4766000 | ||
Notes:
1. Proposed production units = 82000+47000= 129000 units
2. Fixed Manufacturing cost under new proposal includes depreciation on new equipment = (8.23-1.09)/7 = $1.02 million
*Since the Labor Cost per unit is reduced by 20%, the new Labor cost per unit = 15- (20% of 15) = $12. As the result the Total Variable Manufacturing Cost per unit is reduced by $3 and Contribution Margin Per unit is increased by $3.
B) Since the Net operating income under Proposed Circumstances is greater than in existing one, Beacon company should favor Automation proposal. Yes should be the answer.
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this is a multi-part
question
Required information The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows Direct materials: 5 pounds at $7 per pound Direct labor: 3 hours at $16 per hour 48 Variable overhead: 3 hours at $4 12 per hour $ 95 Total standard cost per unit The planning budget for...
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