Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here. The following names are to be used when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss Revised Fixed costs = 56000 + 18250 = $74250 Variable cost per unit = 1.75 - 0.15 = $1.6 per unit Contribution margin per unit = Sales price per unit - Variable cost per unit = 2.15 - 1.6 = $0.55 per unit Breakeven point in units = Fixed costs/ Breakeven point in units = 74250/0.55 = 135000 units Breakeven sales revenue = 135000*2.15 = $290,250 1. Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345) Flanders Manufacturing Contribution Margin Income Statement For the Month
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here. The following names are to be used when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss Revised Fixed costs = 56000 + 18250 = $74250 Variable cost per unit = 1.75 - 0.15 = $1.6 per unit Contribution margin per unit = Sales price per unit - Variable cost per unit = 2.15 - 1.6 = $0.55 per unit Breakeven point in units = Fixed costs/ Breakeven point in units = 74250/0.55 = 135000 units Breakeven sales revenue = 135000*2.15 = $290,250 1. Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345) Flanders Manufacturing Contribution Margin Income Statement For the Month
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.
The following names are to be used when completing this problem:
| Operating Income | Variable Costs |
Sales |
| Fixed Costs per Unit | Selling Price per Unit |
Variable Cost per Unit |
| Contribution Margin | Fixed Costs |
Operating Loss |
Revised Fixed costs = 56000 + 18250 = $74250
Variable cost per unit = 1.75 - 0.15 = $1.6 per unit
Contribution margin per unit = Sales price per unit - Variable cost per unit
= 2.15 - 1.6 = $0.55 per unit
Breakeven point in units = Fixed costs/ Breakeven point in units
= 74250/0.55 = 135000 units
Breakeven sales revenue = 135000*2.15 = $290,250
1. Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345)
| Flanders Manufacturing |
| Contribution Margin Income Statement |
| For the Month |
Transcribed Image Text:Current
Units sold
216,000
$
Sales price per unit
Variable cost per unit
Contribution margin per unit
Fixed costs
Break-even (in units)
Break-even (in dollars)
2.15
1.75
2$
0.40
$ 56,000
140,000
$301,000
Sales
Variable costs
Contribution margin
Fixed costs
Net income (loss)
$464,400
$378,000
$ 86,400
$ 56,000
$ 30,400
Transcribed Image Text:Contribution Margin Income Statement
Sales (216000*2.15)
Less: Variable Costs (216000*1.6)
Contribution Margin
Less: Fixed costs
Operating Income
464400
-345600
118800
-74250
44550
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education