Required information [The following information applies to the questions displayed below] Burchard Company sold 37,000 units of its only product for $16.40 per unit this year. Manufacturing and selling the product required $304,000 of fixed costs. Its per unit variable costs follow. Direct materials Direct labor Variable overhead costa Variable selling and administrative costs For the next year, management will use a new material, which will reduce direct materials costs to $2.10 per unit and reduce direct labor costs to $1.60 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change Management is also considering raising its selling price to $19.68 per unit, which would decrease unit sales volume to 35,150 units. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the new aterial and (b) using the new material and increasing the selling price. BURCHARD COMPANY Contribution Margin Income Statement Number of units: With new material $ 4.20 3.20 0.42 0.22 37,000 with new material and 35,150
Required information [The following information applies to the questions displayed below] Burchard Company sold 37,000 units of its only product for $16.40 per unit this year. Manufacturing and selling the product required $304,000 of fixed costs. Its per unit variable costs follow. Direct materials Direct labor Variable overhead costa Variable selling and administrative costs For the next year, management will use a new material, which will reduce direct materials costs to $2.10 per unit and reduce direct labor costs to $1.60 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change Management is also considering raising its selling price to $19.68 per unit, which would decrease unit sales volume to 35,150 units. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the new aterial and (b) using the new material and increasing the selling price. BURCHARD COMPANY Contribution Margin Income Statement Number of units: With new material $ 4.20 3.20 0.42 0.22 37,000 with new material and 35,150
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required information
[The following information applies to the questions displayed below.)
Burchard Company sold 37,000 units of its only product for $16.40 per unit this year. Manufacturing and selling the
product required $304,000 of fixed costs. Its per unit variable costs follow.
Direct materials
Direct labor
Variable overhead costs
Variable selling and administrative costs
For the next year, management will use a new material, which will reduce direct materials costs to $2.10 per unit and
reduce direct labor costs to $1.60 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling
and administrative costs per unit will not change Management is also considering raising its selling price to $19.68 per
unit, which would decrease unit sales volume to 35,150 units.
2. Prepare a contribution margin income statement for next year with two columns showing the expected results of (a) using the new
material and (b) using the new material and increasing the selling price.
BURCHARD COMPANY
Contribution Margin Income Statement
Number of units:
$ 4.20
3.20
0.42
0.22
With new material
37,000
With new
material and
price increase
35,150
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