Bauer Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $100. Variable costs Manufacturing $ 30 Selling Fixed costs Manufacturing $360,000 Selling and administrative $ 162,000 a. Break-even points in units Break-even points in dollars b. Required Sales in units Required Sales in dollars c. Fixed cost of salaries 12 per unit per unit per year per year Required a. Use the per-unit contribution margin approach to determine the break-even point in units and dollars. b. Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain profit of $232,000. c. Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 12,000 units, how much could it pay in salaries for salespeople and still have a profit of $232,000? (Hint: Use the equation method.)

Bauer Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $100. Variable costs Manufacturing $ 30 Selling Fixed costs Manufacturing $360,000 Selling and administrative $ 162,000 a. Break-even points in units Break-even points in dollars b. Required Sales in units Required Sales in dollars c. Fixed cost of salaries 12 per unit per unit per year per year Required a. Use the per-unit contribution margin approach to determine the break-even point in units and dollars. b. Use the per-unit contribution margin approach to determine the level of sales in units and dollars required to obtain profit of $232,000. c. Suppose that variable selling costs could be eliminated by employing a salaried sales force. If the company could sell 12,000 units, how much could it pay in salaries for salespeople and still have a profit of $232,000? (Hint: Use the equation method.)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 46E: Lotts Company produces and sells one product. The selling price is 10, and the unit variable cost is...

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Grand Canyon Manufacturing Inc. produces and sells a product with a price of 100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity: Overhead: Selling and administrative expenses: Required: 1. Classify each cost element as either variable, fixed, or semi-variable. (Hint: Recall that variable expenses must go up in direct proportion to changes in the volume of activity.) 2. Calculate the break-even point in units and dollars. (Hint: First use the high-low method illustrated in Chapter 4 to separate costs into their fixed and variable components.) 3. Prepare a break-even chart. 4. Prepare a contribution income statement, similar in format to the statement appearing on page 540, assuming sales of 5,000 units. 5. Recompute the break-even point in units, assuming that variable costs increase by 20% and fixed costs are reduced by 50,000.
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