Question

Crane Corporation had collected the following information after its first year of sales. Sales were 1,600,000 on 100,000 units, selling expenses 220,000 (40% variable and 60% fixed), direct materials $504,400, direct labor $306,000, administrative expenses 278,000 (20% variable 80% fixed) and manufactoring overhead 352,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. it has projected that the unit sales will increase by 10% next year.

x Your answer is incorrect. Try again. Compute the break-even point in units and sales dollars for the current year. x Break-even point in units 116900 units Break-even point in dollars 1870400 X Your answer is incorrect. Try again. The company has a target net income of $206,000. What is the required sales in dollars for the company to meet its target? Sales dollars required for target net income 2670400 x Your answer is incorrect. Try again. If the company meets its target net income number, by what percentage could its sales fall before it is operating at a loss? That is, what is its margin place, e.g. 10.5.) Margin of safety ratio 29.9%

the questions are posted in the picture & are the ones i need correct answers to. Thank you!

Answer 1

Note:All the calculation given below are for current year at a Sales level of 100,000 units
Statement of Costs
	Variable Costs	Fixed Costs
	Total	Per unit
Direct Materials	$                     504,400	$                     5.04	$                          -
Direct labor	$                     306,000	$                     3.06	$                          -
Manufacturing Overhead	$                     246,400	$                     2.46	$                105,600
Selling expneses	$                       88,000	$                     0.88	$                132,000
Administrative expenses	$                       55,600	$                     0.56	$                222,400
Total	$                  1,200,400	$                   12.00	$                460,000
Calculation of Current Year
Contribution Margin per unit($16.00-$12.00)	$                           4.00
Contribution Margin ratio($4 / $16)	25%
Break-even Point in units($460,000 / $4)	115,000	units
Break-even Point in dollars($460,000/0.25)	$                  1,840,000
Target Net Income	$                     206,000
Add:Fixed Costs	$                     460,000
Target Contribution Margin	$                     666,000
Sales Units required($666,000/$4)	166500	units
Sales Dollars required(166,500 units*$16)	$                  2,664,000
Margin of Safety($2,664,000-$1,840,000)	$                     824,000
Margin of Safety ratio($824,000 / $2,664,000)	30.9%