Flanders Manufacturing is considering purchasing a new machine that will reducevariable costs per part produced by $0.10. The machine will increase fixed costs by$12,000 per year. The information they will use to consider these changes is shownhere.A. What will the impact be on the break-even point if Flanders purchases the newmachinery? Round per unit cost answers to two decimal places.CurrentNew MachineUnits Sold221,000Sales Price Per Unit$2.10Variable Cost Per Unit$1.70Contribution Margin Per Unit$0.40%24Fixed Costs$60,000Break-Even (in units)150,000Break-Even (in dollars)$315,000B. What will the impact be on net operating income if Flanders purchases the newmachinery?CurrentNew MachineSales$464,100Variable Costs375,700Contribution Margin$88,400Fixed Costs60,000Net Income (Loss)$28,400C. What would your recommendation be to Flanders regarding this purchase?a. The new equipment will increase fixed costs substantially but net income will stillincrease due to the increased variable cost savings, which leads to a higher contributionmargin. The machine should be purchased.b. The new equipment will decrease fixed costs substantially and net income willincrease due to the increased variable cost savings, which leads to a higher contributionmargin. The machine should be purchased.c. The new equipment will increase fixed costs substantially and net income will decreasedue to the decreased variable cost savings, which leads to a lower contribution margin.The machine should not be purchased.d. The new equipment will decrease fixed costs substantially but net income will stilldecrease due to the decreased variable cost savings, which leads to a lower contributionmargin. The machine should not be purchased.

A profit analysis table helps in identifying the cost points of a product and help in calculating…

A. What will the impact be on the break-even point if Flanders purchases the new machinery? Round per unit cost answers to two decimal places. Current New Machine Units Sold 221,000 Sales Price Per Unit $2.10 Variable Cost Per Unit $1.70 Contribution Margin Per Unit $0.40 Fixed Costs $60,000 Break-Even (in units) 150,000 Break-Even (in dollars) $315,000 B. What will the impact be on net operating income if Flanders purchases the new machinery? Current New Machine Sales $464,100 Variable Costs 375,700 Contribution Margin $88,400 Fixed Costs 60,000 Net Income (Loss) $28,400 C. What would your recommendation be to Flanders regarding this purchase?

A. What will the impact be on the break-even point if Flanders purchases the new machinery? Round per unit cost answers to two decimal places. Current New Machine Units Sold 221,000 Sales Price Per Unit $2.10 Variable Cost Per Unit $1.70 Contribution Margin Per Unit $0.40 Fixed Costs $60,000 Break-Even (in units) 150,000 Break-Even (in dollars) $315,000 B. What will the impact be on net operating income if Flanders purchases the new machinery? Current New Machine Sales $464,100 Variable Costs 375,700 Contribution Margin $88,400 Fixed Costs 60,000 Net Income (Loss) $28,400 C. What would your recommendation be to Flanders regarding this purchase?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1
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