Question

Moscot manufactures high-end sunglasses that it sells in retail shops and online for $310, on av L01, 2, 3, 4, 5 P17-30 Applications of Dirferential Analysis Moncol Assume the following represent manufacturing and other costs. Fixed Costs per Month $ 80 Factory overhead 50 Selling and administrative. Variable costs per Unit Direct materials. .... Direct labor. Factory overhead Distribution Total $450.000 375.000 $825.00 35 Total 10 $175 The variable distribution costs are for transportation to retail partners. Assume the current monthly production and sales volume is 15,000 units. Monthly capacity is 20,000 units. Required Determine the effect of each of the following independent situations on monthly profits. a. A $50 increase in the unit selling price should result in a 2,000-unit decrease in monthly sales. b. A 10% decrease in the unit selling price should result in a 6,000-unit increase in monthly sales However, because of capacity constraints, the last 1,000 units would be produced during overtime with the direct labor costs increasing by 50%. c. A British distributor has proposed to place a special, one-time order for 1,000 units at a reduced price of $250 per unit . The distributor would pay all transportation costs. There would be additional final selling and administrative costs of $750.

Answer 1

C B $310 175 $135 15000 $2,025,000 825,000 $1,200,000 7 8 9 A 1 Selling price per unit 2 Variable costs per unit 3 Contribution Margin per unit 4 Current number of units sold 5 Total Contribution Margin per month 6 Total Fixed Costs per month Monthly Profit 8 a. 10 Selling price per unit 11 Variable costs per unit 12 Contribution Margin per unit 13 Number of units sold 14 Total Contribution Margin per month 15 Total Fixed Costs per Month Monthly Profit 17 18 Increase in Monthly Profits 19 $360 175 $185 13000 $2,405,000 825,000 $1,580,000 16 $380,000

B C 310 175 A 1 Selling price per unit 2 Variable costs per unit 3 Contribution Margin per unit 4 Current number of units sold 5 Total Contribution Margin per month 6 Total Fixed Costs per Month Monthly Profit 8 =B1-B2 15000 =B3*B4 825000 7 =B5-B6 9 a. =B1+50 175 =B10-B11 =B4-2000 =B12*B13 10 Selling price per unit 11 Variable costs per unit 12 Contribution Margin per unit 13 Number of units sold 14 Total Contribution Margin per month 15 Total Fixed Costs per Month 16 Monthly Profit 17 18 Increase in Monthly Profits 19 825000 =B14-B15 =B16-B7

B C с D E F А 1 Selling price per unit $310 2 Variable costs per unit 175 3 Contribution Margin per unit $135 4 Current number of units sold 15000 5 Total Contribution Margin per month $2,025,000 6 Total Fixed Costs per Month 825,000 7 Monthly Profit $1,200,000 8 9 b. 10 Number of units sold 21000 11 For first 20,000 units 12 Selling price per unit $279 13 Variable costs per unit 175 14 Contribution Margin per unit $104 15 Number of units 20,000 16 Total Contribution Margin $2,080,000 17 18 Aggregate Contribution Margin per Month $2,159,000 19 Total Fixed Costs per Month 825,000 20 Monthly Profit $1,334,000 21 22 Increase in Monthly Profit $134,000 23 For last 1,000 units Selling price per unit Variable costs per unit Contribution Margin per unit Number of units Total Contribution Margin $279 200 $79 1,000 $79,000

A B D E 310 175 =B1-B2 15000 =B3*B4 825000 =B5-B6 =B4+6000 1 Selling price per unit 2 Variable costs per unit 3 Contribution Margin per unit 4 Current number of units sold 5 Total Contribution Margin per month 6 Total Fixed Costs per Month 7 Monthly Profit 8 9 b. 10 Number of units sold 11 For first 20,000 units 12 Selling price per unit 13 Variable costs per unit 14 Contribution Margin per unit 15 Number of units 16 Total Contribution Margin 17 18 Aggregate Contribution Margin per month 19 Total Fixed Costs per Month 20 Monthly Profit 21 22 Increase in Monthly Profit 23 =B1-(81*10%) 175 =B12-B13 20000 =B14*B15 For last 1,000 units Selling price per unit Variable costs per unit Contribution Margin per unit Number of units Total Contribution Margin =B1-(B1*10%) =B2+(50*50%) =E12-E13 1000 =E14*E15 =B16+E16 825000 =B18-19 =B20-B7

B с D А 1 Selling price per unit 2 Variable costs per unit 3 Contribution Margin per unit 4 Current number of units sold 5 Total Contribution Margin per month 6 Total Fixed Costs per Month 7 Monthly Profit 8 $310 175 $135 15000 $2,025,000 825,000 $1,200,000 8 9 C. 10 For one-time time order of 1,000 units 11 Selling price per unit 12 Variable costs per unit 13 Contribution Margin per unit 14 Number of units 15 Total Contribution Margin 16 17 Monthly Profit 18 19 Increase in Monthy Profit 20 $250 165 $85 1,000 $85,000 $1,285,000 $85,000

A B с 310 175 =B1-B2 15000 =B3*B4 825000 =B5-B6 A 1 Selling price per unit 2 Variable costs per unit 3 Contribution Margin per unit 4 Current number of units sold 5 Total Contribution Margin per month 6 Total Fixed Costs per Month 7 Monthly Profit 8 9 C. 10 For one-time time order of 1,000 units 11 Selling price per unit 12 Variable costs per unit 13 Contribution Margin per unit 14 Number of units 15 Total Contribution Margin 16 17 Monthly Profit 18 19 Increase in Monthy Profit 20 250 =B2-10 =B11-B12 1000 =B13*B14 =B7+B15 =B17-B7 21