Drake Company produces a single product. Last year's income statement is as follows: Sales (21,000 units) $1,278,900 Less: Variable costs 879,900 Contribution margin $399,000 Less: Fixed costs 259,800 Operating income $139,200 Required: Question Content Area Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $234,100 per year, but will lower variable costs to 42 percent of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming Drake makes this investment. Round all amounts to the nearest dollar. Drake CompanyBudgeted Income Statement $Sales Less: Variable costs $Contribution margin Less: Fixed costs $Net income Question Content Area What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.
Drake Company produces a single product. Last year's income statement is as follows: Sales (21,000 units) $1,278,900 Less: Variable costs 879,900 Contribution margin $399,000 Less: Fixed costs 259,800 Operating income $139,200 Required: Question Content Area Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $234,100 per year, but will lower variable costs to 42 percent of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming Drake makes this investment. Round all amounts to the nearest dollar. Drake CompanyBudgeted Income Statement $Sales Less: Variable costs $Contribution margin Less: Fixed costs $Net income Question Content Area What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Drake Company produces a single product. Last year's income statement is as follows:
| Sales (21,000 units) | $1,278,900 |
| Less: Variable costs | 879,900 |
| Contribution margin | $399,000 |
| Less: Fixed costs | 259,800 |
| Operating income | $139,200 |
Required:
Question Content Area
Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $234,100 per year, but will lower variable costs to 42 percent of sales. Units sold will remain unchanged. Prepare a
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$Sales |
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Less: Variable costs |
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$Contribution margin |
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Less: Fixed costs |
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$Net income |
Question Content Area
What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.
units
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