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Balcom Enterprises is planning to introduce a new product that will sell for $110 a unit. Manufacturing cost estimates for 21,500 units for the first year of production are: • Direct materials $1,139,500 • Direct labor $731,000 (based on $17 per hour x 43,000 hours) Although overhead has not been estimated for the new product, monthly data for Balcom's total production for the last two years has been analyzed using simple linear regression. The analysis results are as follows: Dependent variable Independent variable Intercept Coefficient on independent variable Coefficient of correlation R² O O O O $15 Based on this information, what is the expected contribution margin per unit to be earned during the first year on 23,000 units of the new product? (Assume that all marketing and administrative costs are fixed.) $13 $99 Factory overhead costs Direct labor hours $32 $ 123,000 $ 4.00 0.920 0.820

Balcom Enterprises is planning to introduce a new product that will sell for $110 a unit. Manufacturing cost estimates for 21,500 units for the first year of production are: • Direct materials $1,139,500 • Direct labor $731,000 (based on $17 per hour x 43,000 hours) Although overhead has not been estimated for the new product, monthly data for Balcom's total production for the last two years has been analyzed using simple linear regression. The analysis results are as follows: Dependent variable Independent variable Intercept Coefficient on independent variable Coefficient of correlation R² O O O O $15 Based on this information, what is the expected contribution margin per unit to be earned during the first year on 23,000 units of the new product? (Assume that all marketing and administrative costs are fixed.) $13 $99 Factory overhead costs Direct labor hours $32 $ 123,000 $ 4.00 0.920 0.820

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Balcom Enterprises is planning to introduce a new product that will sell for $110 a unit. Manufacturing cost estimates for 21,500 units for the first year of production are: • Direct materials $1,139,500 • Direct labor $731,000 (based on $17 per hour x 43,000 hours) Although overhead has not been estimated for the new product, monthly data for Balcom's total production for the last two years has been analyzed using simple linear regression. The analysis results are as follows: Dependent variable Independent variable Intercept Coefficient on independent variable Coefficient of correlation R² 000 Based on this information, what is the expected contribution margin per unit to be earned during the first year on 23,000 units of the new product? (Assume that all marketing and administrative costs are fixed.) $15 $13 Factory overhead costs Direct labor hours $99 $32 $ 123,000 $ 4.00 0.920 0.820
Transcribed Image Text:Balcom Enterprises is planning to introduce a new product that will sell for $110 a unit. Manufacturing cost estimates for 21,500 units for the first year of production are: • Direct materials $1,139,500 • Direct labor $731,000 (based on $17 per hour x 43,000 hours) Although overhead has not been estimated for the new product, monthly data for Balcom's total production for the last two years has been analyzed using simple linear regression. The analysis results are as follows: Dependent variable Independent variable Intercept Coefficient on independent variable Coefficient of correlation R² 000 Based on this information, what is the expected contribution margin per unit to be earned during the first year on 23,000 units of the new product? (Assume that all marketing and administrative costs are fixed.) $15 $13 Factory overhead costs Direct labor hours $99 $32 $ 123,000 $ 4.00 0.920 0.820
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