Question

Listed here are the total costs associated with the production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $553 each. Costs 1. Plastic for casing-$21,000 2. Wages of assembly workers-$82,000 3. Property taxes on factory-$7,000 4. Accounting staff salaries-$32,000 5. Drum stands (1,000 stands purchased) $40,000 6. Rent cost of equipment for sales staff-$36,000 7. Upper management salaries-$220,000 8. Annual flat fee for factory maintenance service-$14,000 9. Sales commissions $18 per unit 10. Machinery depreciation, straight-line-$47,000

Answer 1

Total Cost Per Drum set 21 82 109 110 111 112 113 114 115 116 117 118 119 21000 82000 40000 143000 40 143 Variable Production Cost Plastic for Casing Wages of Assembly workers Drum Stands Total Variable Production Costs Fixed Production Cost Property Taxes on Factory Annual Flat fee for Factory Maintenance Service Machinery Depreciation Total Fixed Production Costs Total Production Cost 7000 14000 47000 68000 211000 7 14 47 68 120 211 121 122 a i) New Sale Price (553-553 * 10%) 497.70 123 124 a ii) 497.70 125 126 New Sale Price (553-553 * 10%) Less Variable expenses Variable Production Costs Variable Selling &dminstrative expenses Total Variable expenses Contribution Margin Per Unit 143 18 127 128 161.00 129 336.70 130

Profit Formula will be Total contribution Margin - Fixed Cost Contribution Margin Per unit * Number of Drums - Fixed Cost Please provide the original operating income Break-even Point Fixed Expenses Contribution Margin Per Unit 68000+32000+36000+220000 336.70 131 a iii) 132 133 134 135 b) 136 137) 138 139 140 141 142 143 144 145 146 147 148 d) 149 150 151 152 1531 356000 336.70 1057 Units Number of Drums (1000*2) Selling Price (2000*497.70) Less Variable expenses (2000 *161) Contribution Margin Less Fixed expenses Toperating Income 2000 995400 322000 673400 356000 317400