Net IncomeIncrease (Decrease)Sunland Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an assembly part for its finished product. A supplieroffers to make 10,300 of the assembly part at $6 per unit. If the offer is accepted, Sunland will save all variable costs but no fixed costs.Prepare an analysis showing the total cost saving, if any, that Sunland will realize by buying the part. (Enter negative amounts using eithera negative sign preceding the number e.g. -45 or parentheses e.g. (45).)AVariable manufacturing costsFixed manufacturing costsPurchase priceMakeTotal annual cost$The decision should be tothe part.ABuy$A

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Answered: Net Income Increase (Decrease) Sunland…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 9E: Gelbart Company manufactures gas grills. Fixed costs amount to 16,335,000 per year. Variable costs...

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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?
Use this information for Stryker Industries to answer the question that follow.Stryker Industries received an offer from an exporter for 15,000 units of product at $17.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $20 Unit manufacturing costs: Variable 11 Fixed 1 What is the amount of income or loss from the acceptance of the offer?
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Calculate selling price of new product; what-if questions; breakeven D&RCorp. has annual revenues of $275,000, an average contribution margin ratio of 34%, and fixed expenses of $100,000.Required:a. Management is considering adding a new product to the company’s product line. The new item will have $8.25 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio.b. If the new product adds an additional $30,600 to D&R’s fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product?c. If 20,000 units of the new product could be sold at a price of $13.75 perunit, and the company’s other business did not change, calculate D&R’s total operating income and average contribution margin ratio.d. Describe how the analysis of adding the new product would be complicated if it were to “steal” some volume from existing products.
Use this information for Stryker Industries to answer the question that follow. Stryker Industries received an offer from an exporter for 30,000 units of product at $19 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $23 Unit manufacturing costs: Variable 10 Fixed 5 What is the amount of income or loss from the acceptance of the offer? Oa. $300,000 loss Ob. $690,000 loss Oc. $570,000 income Od. $270,000 income Previous Next 7:36 PM CP 12/13/2020
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[The following information applies to the questions displayed below.] Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics: Sales price Variable costs Fixed costs $ 12.00 per case 5.50 per case 391,950 per year Assume that the company plans to sell 75,300 units annually. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will be the operating profit? b. What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? Note: Do not round intermediate calculations. c. What is the impact on operating profit if variable costs per unit decrease by 20 percent? Increase by 10 percent? Note: Do not round intermediate calculations. d. Suppose that fixed costs for the year are 20 percent lower than projected and variable costs per unit are 20 percent higher tha projected. What impact will these cost changes have on operating profit for the year? Will profit…
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CVP analysis, margin of safety. Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000. Required: Compute the contribution margin percentage. Compute the selling price if variable costs are $16 per unit. Suppose 75,000 units are sold. Compute the margin of safety in units and dollars. What does this tell you about the risk of Morrison making a loss? What are the most likely reasons for this risk to increase?
Vaughn Manufacturing has the following costs when producing 100000 units: Variable costs $600000 Fixed costs 900000 An outside supplier has offered to make the item at $4.50 a unit. If the decision is made to purchase the item outside, current production facilities could be leased to another company for $167000. The net increase (decrease) in the net income of accepting the supplier's offer is O $317000. O $(17000). O $832000. O $283000.
The Lamar Company manufactures wiring tools. The company is currently producing well below its full capacity. The Boston Company has approached Lamar with an offer to buy 15,000 tools at $1.80 each. Lamar sells its tools wholesale for $1.90 each; the average cost per unit is $1.88, of which $0.32 is fixed costs. If Lamar were to accept Boston's offer, what would be the increase in Lamar's operating profits? Multiple Choice O O $1,500. $5,100. $1,200. $3,600.
B. C. D&R Corporation has annual revenues of $375,000, an average contribution margin ratio of 32%, and fixed expenses of $150,000. Required: a. Management is considering adding a new product to the company's product line. The new item will have $9.52 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $26,880 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 16,000 units of the new product could be sold at a price of $15.50 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Complete this question by entering your answers in the tabs below. Required A Required B Management is considering adding a new product to the company's product line. The new item will have $9.52 of…

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