Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1,200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: Currents Units sold 1,400 Sales price per unit $225 Variable cost per unit $145 Fixed costs $52,000 Break-even (in units) 650 Contribution margin ratio $0.36 break-even (in dollars) $146,250 Sales $315,000 Variable costs $203,000 Fixed costs $52,000 Net income (loss) $60,000 The following names are to be considered when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss If Shonda & Shonda purchases the new computer, what will be the company’s break-even point in units? Use commas as needed (i.e. 1,234). If Shonda & Shonda purchases the new machinery, what will be the company’s break-even point in dollars? . Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Construct a complete contribution margin income statement to support your answers above. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345)
2. Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1,200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows:
Currents
Units sold 1,400
Sales price per unit $225
Variable cost per unit $145
Fixed costs $52,000
Break-even (in units) 650
Contribution margin ratio $0.36
break-even (in dollars) $146,250
Sales $315,000
Variable costs $203,000
Fixed costs $52,000
Net income (loss) $60,000
The following names are to be considered when completing this problem:
| Operating Income | Variable Costs |
Sales |
| Fixed Costs per Unit | Selling Price per Unit |
Variable Cost per Unit |
| Contribution Margin | Fixed Costs |
Operating Loss |
- If Shonda & Shonda purchases the new computer, what will be the company’s break-even point in units? Use commas as needed (i.e. 1,234).
- If Shonda & Shonda purchases the new machinery, what will be the company’s break-even point in dollars? . Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).
- Construct a complete contribution margin income statement to support your answers above. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).
Shonda & Shonda
Contribution Margin Income Statement
For the Year
- Complete the following contribution margin income statement to properly reflect the break-even information given in the initial problem. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).
Shonda & Shonda
Contribution Margin Income Statement
For the Year
Given the above information, should Shonda & Shonda purchase the new computer? . NOTE: Your answer is either "Yes" or "No" - first letter capitalized and no quotation marks.
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