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. Flanders Manufacturing data Current Units sold 216,000 Sales price per unit $2.15 Variable cost per unit $1.75 Contribution margin per unit $0.40 Fixed costs $56,000 Break-even (in units) 140,000 Break-even (in dollars) $301,000 Sales $464,400 Variable costs $378,000 Contribution margin $86,400 Fixed costs $56,000 Net income (loss) $30,400 A) What will the impact be on the break-even point if Flanders purchases the new machinery? New break-even point in units? New break-even point in dollars? B) What will the impact be on net operating income if Flanders purchases the new machinery? New net income(loss)?
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. Flanders Manufacturing data Current Units sold 216,000 Sales price per unit $2.15 Variable cost per unit $1.75 Contribution margin per unit $0.40 Fixed costs $56,000 Break-even (in units) 140,000 Break-even (in dollars) $301,000 Sales $464,400 Variable costs $378,000 Contribution margin $86,400 Fixed costs $56,000 Net income (loss) $30,400 A) What will the impact be on the break-even point if Flanders purchases the new machinery? New break-even point in units? New break-even point in dollars? B) What will the impact be on net operating income if Flanders purchases the new machinery? New net income(loss)?
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 7EA: Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per...
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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.
Flanders Manufacturing data
| Current | |
|---|---|
| Units sold | 216,000 |
| Sales price per unit | $2.15 |
| Variable cost per unit | $1.75 |
| Contribution margin per unit | $0.40 |
| Fixed costs | $56,000 |
| Break-even (in units) | 140,000 |
| Break-even (in dollars) | $301,000 |
| Sales | $464,400 |
| Variable costs | $378,000 |
| Contribution margin | $86,400 |
| Fixed costs | $56,000 |
| Net income (loss) | $30,400 |
A) What will the impact be on the break-even point if Flanders purchases the new machinery? New break-even point in units? New break-even point in dollars?
B) What will the impact be on net operating income if Flanders purchases the new machinery? New net income(loss)?
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