Blaster Corp. manufactures hiking boots. For the coming year the company has budgeted the following costs for production and sale of 30,000 pairs of boots. Budgeted costs Budgeted costs/pair % of costs considered variable Direct materials $630,000 $21 100% Direct labor 300,000 10 100 manufacturing overhead 720,000 24 25 selling and admin expenses 600,000 20 20 totals $2,250,000 $75 A. Compute the sales price per unit that would result in budgeted operating income of $900,000, assuming that the company produces and sells 30,000 pairs(compute the budgeted sales revenue needed to produce this operating income) Assume the company decides to sell the boots at a unit price of $121/pair B. Compute the following: Total fixed costs budgeted for the year, variable cost per unit, contribution margin per pair of boots and number of pairs that must be produced and sold annually to break even at a sales price of $121 per pair
Blaster Corp. manufactures hiking boots. For the coming year the company has budgeted the following costs for production and sale of 30,000 pairs of boots. Budgeted costs Budgeted costs/pair % of costs considered variable Direct materials $630,000 $21 100% Direct labor 300,000 10 100 manufacturing overhead 720,000 24 25 selling and admin expenses 600,000 20 20 totals $2,250,000 $75 A. Compute the sales price per unit that would result in budgeted operating income of $900,000, assuming that the company produces and sells 30,000 pairs(compute the budgeted sales revenue needed to produce this operating income) Assume the company decides to sell the boots at a unit price of $121/pair B. Compute the following: Total fixed costs budgeted for the year, variable cost per unit, contribution margin per pair of boots and number of pairs that must be produced and sold annually to break even at a sales price of $121 per pair
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Blaster Corp. manufactures hiking boots. For the coming year the company has budgeted the following costs for production and sale of 30,000 pairs of boots.
| Budgeted costs | Budgeted costs/pair | % of costs considered variable | |
| Direct materials | $630,000 | $21 | 100% |
| Direct labor | 300,000 | 10 | 100 |
| manufacturing |
720,000 | 24 | 25 |
| selling and admin expenses | 600,000 | 20 | 20 |
| totals | $2,250,000 | $75 |
A. Compute the sales price per unit that would result in budgeted operating income of $900,000, assuming that the company produces and sells 30,000 pairs(compute the budgeted sales revenue needed to produce this operating income)
Assume the company decides to sell the boots at a unit price of $121/pair
B. Compute the following: Total fixed costs budgeted for the year, variable cost per unit, contribution margin per pair of boots and number of pairs that must be produced and sold annually to break even at a sales price of $121 per pair
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