Morgan Designs manufactures decorative iron railings. In preparing for next year's operations, management has developed the...

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Morgan Designs manufactures decorative iron railings. In preparing for next years operations, management has developed the f

business accounting

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Answer 1

Answer #1

Total Variable cost per Unit = Direct Material+ Direct labor + Variable MOH +Variable Selling and Administrative OH

Varibale production cost per Unit = 10.00+2.50+3.50= 16

Fixed cost = Fixed MOH + Fixed Selling and Administrative Expenses

= 80,000+30,000

REvised the data :

Variable Prodcution cost per Unit increase by 15%

Variable Prodcut cost per Unit = 16.00 *1.15 = 18.40

Variable cost per Unit = 18.40+5.00 = $ 23.40

Fixed Selling and Administrative Expenses increased by 12%

Fixed Selling and Admin Expenses = 30,000*1.12 = 33,600

Total Fixed cost = 80,000+33,600 = 113,600

Break Even Point is Dollar Sales = Fixed cost / CM ratio

CM ratio = ( selling Price -Varible cost) / Selling Price

= (50-23.40)/50 = 53.20%

Break Even Pointin Dollar sales = 113,600 / 0.532 = 213,533.835

Answer : $ 213,534

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Answer 2

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