Question

Required information The following information applies to the questions displayed below.) Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow. Model no. 6754: Variable costs, $18.00 per unit Annual fixed costs, $986,200 Model no. 4399: Variable costs, $11.80 per unit Annual fixed costs, $1,114,200 Corrigan's selling price is $66 per unit for the universal gismo, which is subject to a 10 percent sales commission (In the following requirements, ignore income taxes.) 2-a. Calculate the net income of the two systems if sales and production are expected to average 41,000 units per year, Net Income Model No. 6754 Model No. 4399

Answer 1

net 2-a. Caleulation ot Ene ome Units sold 4lo00 ts Model No. 4399 Model No. 675 Per Unit Total Per Unst To tat C6 2706 00o $2,706, 000 66 Sales Aevenuo 738, oso 80 483 8O $18 Less Vatiable costs $6.60270,600 $6.60 $ 270, 600 Salos Commisson Eontrce bution touords fixod costs and net income $41.40 1697 y 17.6 1951, 40 $24.0596, 20021-13 fired Costs Less: !I14, 200 Net Tncome 17.35 71120U $20 42 374o0

3. ॐप५०,000 Cast ot Equapment 1 5 yecues as pez strcaight- Depeeeiatfon per. ear ine Aesf dual valuue metho d Cost 440 000 5 yeazs easn 971 C of inceme to nold Onits to be Tastget neome + Feced C0sts+ Deprceiation cont button pez ust # 971,000 t$4200 t$ 1000 47.60 2173,200 $47.60 45,655 onits 4. Lel, the valume lerel be x nts Total cast ol Model no. 6754 its x16+ $660) + 986,2 00 X 24.6 96, 200 -7 Cost Modee Total no. 4399 x onts x . g0 $6.60) + L1,200 154x t 1114, 200

By the Problem 1.4x t 111,200 24.6 x t 966,2 986, 200 24.6x 18.4X 114, 200 6.2 X 128 CTOO 6 2 20,615.1 Volume level 20645 nts
Note: As per question 4 at volume level 'x' total cost of two models are equal. For this the above equation is created for finding out the volume level.