Burchard Company sold 42,000 units of its only product for $17.40 per unit this year. Manufacturing and selling the product required $314,000 of fixed costs. Its per unit variable costs follow. Direct materials Direct labor Variable overhead costs Variable selling and administrative costs $4.70 3.70 0.47 0.27 For the next year, management will use a new material, which will reduce direct materials costs to $1.41 per unit and reduce direct labor costs to $2.59 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change Management is also considering raising its selling price to $22.62 per unit, which would decrease unit sales volume to 35,700 units
Burchard Company sold 42,000 units of its only product for $17.40 per unit this year. Manufacturing and selling the product required $314,000 of fixed costs. Its per unit variable costs follow. Direct materials Direct labor Variable overhead costs Variable selling and administrative costs $4.70 3.70 0.47 0.27 For the next year, management will use a new material, which will reduce direct materials costs to $1.41 per unit and reduce direct labor costs to $2.59 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change Management is also considering raising its selling price to $22.62 per unit, which would decrease unit sales volume to 35,700 units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Burchard Company sold 42,000 units of its only product for $17.40 per unit this year. Manufacturing and selling the
product required $314,000 of fixed costs. Its per unit variable costs follow
Direct materials
Direct labor
Variable overhead costs
Variable selling and administrative costs
$ 4.70
3,70
0.47
0.27
For the next year, management will use a new material, which will reduce direct materials costs to $141 per unit and
reduce direct labor costs to $2.59 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling)
and administrative costs per unit will not change. Management is also considering raising its selling price to $22.62 per
unit, which would decrease unit sales volume to 35,700 units.
Transcribed Image Text:Required information
Requirea:
1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the selling
price.
Note: Round your answers to 2 decimal places.
Sales price per unit
Variable costs per unit
Direct materials
Direct labor
Variable overhead
Variable selling & administrative expenses
Variable costs per unit
Contribution margin per unit
With new material
BURCHARD COMPANY
Contribution Margin Income Statement
Number of units:
2. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the new
material and (b) using the new material and increasing the selling price.
With new material
With new material
and price
increase
42.000
With new
material and
price increase
D
35,700
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