Required information[The following information applies to the questions displayed below.]Astro Company sold 26,500 units of its only product and reported income of $246,000 for the current year. During aplanning session for next year's activities, the production manager notes that variable costs can be reduced 60% byinstalling a machine that automates several operations. To obtain these savings, the company must increase its annualfixed costs by $150,000. Total units sold and the selling price per unit will not change.ASTRO COMPANYContribution Margin Income StatementFor Year Ended December 31Sales ($50 per unit)Variable costs ($35 per unit).Contribution marginFixed costsIncomeASTRO COMPANYContribution Margin Income StatementFor Year Ended December 312. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assumesales are $1,325,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)Contribution margin$ 1,325,000$0927,500397,500151,500$ 246,0000

Income statement is a financial statement that shows profitability, total revenue and total expenses…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $78.30 per unit. Determine whether management should accept or reject the new business.
Pharoah Company produces a single product. It sold 67,500 units last year with the following results: Sales $1,687,500 Variable costs $675,000 Fixed costs 270,000 945,000 Operating income before taxes 742,500 Income taxes (45%) 334,125 Operating income $408,375 In an attempt to improve its product, Pharoah is considering replacing a component part in its product that has a cost of $5 per unit with a new and better part costing $10 per unit during the coming year. A new machine would also be needed to increase plant capacity. The machine would cost $81,000, with a useful life of six years and no salvage value. The company uses straight-line depreciation on all plant assets. What was Pharoah’s break-even point in units last year? Break-even point enter the break-even point in units units How many units of product would Pharoah have had to sell in the past…
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In an attempt to improve the company's profit performance, management is considering a number of alternative actions.Instructions:Determine the effect of each of the following on monthly profits. Each situation is to beevaluated independently of all others.1.Reduce the unit selling price by P2 per unit. Action will increase monthly sales by20,000 units. Fixed factory overhead will increase by P16,000.
Interchange Inc. had sales of $400,000, based on a unit selling price of $200. The variable cost per unit was $175, and fixed costs were $75,000. The maximum sales within Interchange Inc.’s relevant range are 2,750 units. Interchange Inc. is considering a proposal to spend an additional $32,750 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity.a. Construct a cost-volume-profit chart indicating the break-even sales for last year. Verify your answer, using the break-even equation. b. Using the cost-volume-profit chart prepared in part (1), determine (A) the income from operations for last year and (B) the maximum income from operations that could have been realized during the year. Verify your answers using the mathematical approach to cost-volume-profit analysis. c. Construct a cost-volume-profit chart indicating the break-even sales for the current year, assuming that a noncancellable contract is signed for the additional…
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Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $13.00 per unit. The unit cost for the business to make the part is $21.00, including fixed costs and $11.00, excluding fixed costs. If 37,870 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? Oa. $302,960 cost increase Ob. $492,310 cost decrease Oc. $75,740 cost increase Od. $75,740 cost decrease
Whispering Winds Inc. has been manufacturing capacity, and variable manufacturing and direct labour costs per unit to make the A supplier offers to make the lampshades per year. variable manufacturing costs will be its own shades for its table lamps. The company is currently operating at 100% of overhead is charged to production at the rate of 50% of direct labour costs. The direct materials lampshades are $4.70 and $5.60, respectively. Normal production is 48,800 table lamps at a price of $13.50 per unit. If Whispering Winds Inc. accepts the supplier's offer all eliminated, but the $41.300 of fixed manufacturing overhead currently being charged to the lampshades will have to be absorbed by other products
Frank Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $25 unit. The unit cost for Frank Co. to make the part is $30, which includes $4 of fixed costs. If 20,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it? a. $40,000 decrease b. $50,000 increase c. $20,000 increase d. $30,000 increase
Subject - account Please help me. Thankyou.
A company is currently using a supplier to make required components. The supplier changes an annual setup cost of $5,000 regardless of the number of parts the company purchases in a single year. In addition to this annual setup fee, the supplier uses the following pricing scheme: # of units $/unit 1- 100 $1,000 each 101 - 500 $800 each 501 - 750 $600 each 751 or more $500 each The company is now exploring the possibility of producing the same component in-house. The company expects to need more than 750 units per year for the next 5 years. The following information describes their in-house production solution: The annual Capital Recover & Return for the needed equipment = $300,000 per year Material Cost per unit = $250 Annual Operation and Maintenance Costs = $100,000 Annual Labor Costs = $150,000 Annual Overhead Costs = $50,000 Question: What is the Breakeven Quantity for this Make / Buy Decision?

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