Gilbert's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses squeeze play. The automotive manufacturers are demanding lower prices, and the steel producers have increased raw material costs. Gibert's contribution margin has shrunk to 70% of reve The company's monthly operating income, prior to these pressures, was $275.000 Read the requirements Requirement 1. To maintain this same level of profit, what sales volume (in sales revenue) must Gilbert now achieve? Begin by identifying the formule to compute the sales in units at various levels of operating income using the contribution margin approach Target sales in dolars Requirements 1.To maintain this same level of profit, what sales volume on sales revenue) must
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- Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $55,000 per year, to solve the problem. With this extra worker, the company could produce and sell 3,000 more units per year. Currently, the selling price per unit is $25 and the cost per unit is $7.85. Using the information provided, calculate the annual financial impact of hiring the extra worker.Kerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit of $360. The companys monthly fixed expenses are $72,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of January when they will sell 500 units. How many units will Kerr need to sell in order to realize a target profit of $120,000? What dollar sales will Kerr need to generate in order to realize a target profit of $120,000? Construct a contribution margin income statement for the month of June that reflects $600,000 in sales revenue for Kerr Manufacturing.Gelbart Company manufactures gas grills. Fixed costs amount to 16,335,000 per year. Variable costs per gas grill are 225, and the average price per gas grill is 600. Required: 1. How many gas grills must Gelbart Company sell to break even? 2. If Gelbart Company sells 46,775 gas grills in a year, what is the operating income? 3. If Gelbart Companys variable costs increase to 240 per grill while the price and fixed costs remain unchanged, what is the new break-even point?
- Grover's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $610,000 and a contribution margin of 75% of revenues. Grover feels like he's in a giant squeeze play: The automotive manufacturers are demanding lower prices, and the steel producers have increased raw material costs. Grover's contribution margin has shrunk to 45% of revenues. The company's monthly operating income, prior to these pressures, was $162,500.Varsity's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $510.000 and a contribution margin of 85% of revenues. Varsity feels Klike he is in a giant squeeze play. The automotive manufacturers are demanding lower prices, and the steel producers have increased raw material costs Varsity's contribution margin has shrunk to 70% of revenues Varsity's monthly operating income, prior to these pressures, was $391,000 Requirements 1. To maintain this same level of profit, what sales volume (in sales revenue) must Varsity now achieve? 2. Varsity believes that his monthly sales revenue will go only as high as $1.160.000 He is thinking about moving operations overseas to cut fixed costs. If monthly sales are $1,150,000, by how much will he need to cut fixed costs to maintain his prior profe level of $391,000 per month? Requirement 1. To maintain this same level of profit what sales volume (in sales revenue) must Varsity now achieve? Select the…XYZ Company's single product has a selling price of $25 per unit. Last year the company reported profit of $125,000 and variable expenses totaling $600,000. The product has a 40% contribution margin ratio. Because of competition, XYZ Company will be forced in the current year to reduce its selling price by $2 per unit. How many units must be sold in the current year to earn the same profit as was earned last year?
- Tanner is CEO of Jones Aerospace. The firm manufactures titanium screws utilized on spacecraft. The firm charges $72.00 per unit for screws that cost the firm $25.20 per unit to manufacture; the firm manufactures 26,400 units. The firm has 927,000 in fixed costs per year. Given this information, calculate the following: D: What is the firm's Breakeven point (in units), given Target Net Income of $420,000? E: What is the firm's Margin of Safety, given its current unit volume? F: What is the firm's Margin of Safety Percentage, given the above information? G: What is the firm's Degree of Operating Leverage (DOL), given the above information? H: If the firm's revenue increases by 22%, what is the predicted percentage change in Net Operating Income, given its DOL? INSTRUCTIONS: Write dollar amounts out to the penny, with no dollar sign: 1000.00. All interest rates should be entered as follows: 11.28 (no percent sign). Show Degree of Operating…Amalgamated Fenderdenter’s sales are $10 million. The company spends $3.5 millionfor purchase of direct materials and $2.5 million for direct labor; overhead is $3.5 millionand profit is $500,000. Direct labor and direct material vary directly with sales, butoverhead does not. The company wants to double its profit.a. By how much should the firm increase annual sales?b. By how much should the firm decrease material costs?c. By how much should the firm decrease labor cost?Cascade Enterprises enjoys a substantial amount of market power in this market. Cascade has fixed costs of $2,000. Currently Cascade Enterprise employs eight workers to produce 430 units of output and, the last unit of worker contribute 40 units of output. If Cascade Enterprises pay a monthly wage rate of $2,000 and charge $50 per units for its product, what is the amount of profit made? A. B. C. D. $3,500 $5,500 $ 60 $1,680
- Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15 per ball, of which 60% is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results: $ 750,000 450,000 300,000 210,000 $ Sales (30,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income 90,000 Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level. 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3 per ball. If this change takes place and the selling price per ball remains constant at $25, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in (2) above. If the expected change in variable expenses…Colin is the managerial accountant in charge of Company A, which sells water bottles. He previously determined that the fixed costs of Company A consist of property taxes, a lease, and executive salaries, which add up to $100,000. The variable cost associated with producing one water bottle is $2 per unit. The water bottle is sold at a premium price of $12. Calculate the breakeven point of the Company?Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $54,000 per year, to solve the problem. With this extra worker, the company could produce and sell 2,900 more units per year. Currently, the selling price per unit is $25.00 and the cost per unit is $7.50. $3.40 1.00 0.40 2.70 $7.50 Direct materials Direct labor Variable overhead Fixed overhead (primarily depreciation of equipment) Total Using the Information provided, calculate the annual financial Impact of hiring the extra worker. Profit $ Increase ✔