Martram Corporation has completed the development of a new line of wrist bracelets. Sales are expected to be 30,000 units in year one and 50,000 in year two. Prepare a two-year operating statement. Prepared variable contribution, and breakeven volume analysis.
Retail Selling Price $30
Retail Margin 50%
Material cost/unit $3.75
Labour cost/unit $1.25
Packaging cost/unit $0.50
Salesforce salaries and expenses $150,000
Manufacturing overhead $ 76,000
Administrative expenses $ 70,000
Sales Promotion (year one only) $ 40,000
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Statementshowing Computations | ||
Paticulars | 30,000 Units | 50,000 Units |
Sales | 900,000.00 | 1,500,000.00 |
Less Variable costs: | ||
Material costs | 112,500.00 | 187,500.00 |
Labour costs | 37,500.00 | 62,500.00 |
Packaging costs | 15,000.00 | 25,000.00 |
Total variable costs | 165,000.00 | 275,000.00 |
Contribution margin = Sales- VC | 735,000.00 | 1,225,000.00 |
Less Fixed costs: | ||
Salesforce salaries and expenses | 150,000.00 | 150,000.00 |
Manufacturing overhead | 76,000.00 | 76,000.00 |
Administrative expenses | 70,000.00 | 70,000.00 |
Sales Promotion | 40,000.00 | - |
Total Fixed costs | 336,000.00 | 296,000.00 |
Income | 399,000.00 | 929,000.00 |
CM Ratio = CM /Sales | 81.67% | 81.67% |
Break even sales = FC/CM Ratio | 411,428.57 | 362,448.98 |
Martram Corporation has completed the development of a new line of wrist bracelets. Sales are expected...
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The Tuff Wheels was getting ready to start its development
project for a new product to be added to their small motorized
vehicle line for children. The new product is called the Kiddy
Dozer. It will look like a miniature bulldozer, complete with
caterpillar tracks and a blade. Tuff Wheels has forecasted the
demand and the cost to develop and produce the new Kiddy Dozer. The
table below contains the relevant information for this project.
Development cost
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Estimated...