Question

Question 9

9) New Plant? Because TrueBeat's capacity is limited to 8,000 units in their current production facility, management would like to explore the impact of building a new production facility. The company is considering a new production facility and equipment that will decrease their variable expenses by 30% but increase fixed expenses by 50%. TrueBeat still plans to produce and sell the same number of units in Year 4 (base). The new plant will give them a relevant range of 5,000 to 12,000 units. a) If the new production facility is built, what would be the company's new (1) contribution margin per unit, (ii) fixed expenses and (iii) the new profit formula? Complete the table below. i) New CM per unit ii) New Fixed expenses iii) New profit formula

Answer 1

Solution - Prol As per provided data required to True Beat's Capacity is limited to 8,000 units in their current prockition facility . a (1) Current variable Cost per unit = New variable Cost per unit = $168 x 0.70 $117.60 New CM per unit = 540 – $117.60 $ 422.40 New exed expenses 346,000 x 1,50 $ 519,000

P. 2 (iii) New profit formula :- NOI = 422.409 - 519,000 under new production facility New Break-even New year 4 Units 1929 6,000 sales revenue $ 663,660 $ 3,240,000 NOI $ 2,016,400 V New break-even in units $ 519,000 = 1,298.69 units of $ 492.40 1,229 units v New break-even sales revenue $ 519,000 $ 499.40 x $540 $ 663, 660

P.3 =) Nol at Sales level of Sales level of 6,000 units $422.40 X6,000 $519,000 $ 2,015, 400 Mos units - Actual sales units. Break-even Sales units = 6,000 – 1,229 = 4, 771 units. Mos dollars = (6,000–1,229) X $540 $ 2,576,340 > MOS percent (Actual sales - Break-even Actual sales sales 4,771 6,000 79.52 % please, Give me thums up.