[The following information applies to the questions displayed below.] Burchard Company sold 25,000 units of its only product for $20.00 per unit this year. Manufacturing and selling the product required $280,000 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 $1.50 per unit and reduce direct labor costs to $1.00 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 $24.00 per unit, which would decrease unit sales volume to 23,750 units. price. Note: Round your answers to 2 decimal places. $ 3.00 2.00 Required: . Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the se Sales price per unit Variable costs per unit Direct materials Direct labor 0.30 0.10 With new material With new material and price increase
[The following information applies to the questions displayed below.] Burchard Company sold 25,000 units of its only product for $20.00 per unit this year. Manufacturing and selling the product required $280,000 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 $1.50 per unit and reduce direct labor costs to $1.00 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 $24.00 per unit, which would decrease unit sales volume to 23,750 units. price. Note: Round your answers to 2 decimal places. $ 3.00 2.00 Required: . Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the se Sales price per unit Variable costs per unit Direct materials Direct labor 0.30 0.10 With new material With new material and price increase
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please do not give solution in image format thanku
Transcribed Image Text: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:
With new material
25,000
With new
material and
price increase
23,750
![[The following information applies to the questions displayed below.]
Burchard Company sold 25,000 units of its only product for $20.00 per unit this year. Manufacturing and selling the
product required $280,000 of fixed costs. Its per unit variable costs follow.
Direct materials.
Direct labor
Variable overhead costs
Variable selling and administrative costs
$ 3.00
2.00
For the next year, management will use a new material, which will reduce direct materials costs to $1.50 per unit and
reduce direct labor costs to $1.00 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 $24.00 per
unit, which would decrease unit sales volume to 23,750 units.
Sales price per unit
Variable costs per unit
Direct materials
Direct labor
Variable overhead
Variable selling & administrative expenses
Variable costs per unit
Contribution margin per unit
0.30
0.10
Required:
1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the sellin-
price.
Note: Round your answers to 2 decimal places.
With new material
With new material
and price
increase](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F349709f6-3e99-49ce-9384-9f2b79e0bb19%2F216cf835-5f68-4593-ba03-465b0b50bff3%2F2axqhvu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
Burchard Company sold 25,000 units of its only product for $20.00 per unit this year. Manufacturing and selling the
product required $280,000 of fixed costs. Its per unit variable costs follow.
Direct materials.
Direct labor
Variable overhead costs
Variable selling and administrative costs
$ 3.00
2.00
For the next year, management will use a new material, which will reduce direct materials costs to $1.50 per unit and
reduce direct labor costs to $1.00 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 $24.00 per
unit, which would decrease unit sales volume to 23,750 units.
Sales price per unit
Variable costs per unit
Direct materials
Direct labor
Variable overhead
Variable selling & administrative expenses
Variable costs per unit
Contribution margin per unit
0.30
0.10
Required:
1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the sellin-
price.
Note: Round your answers to 2 decimal places.
With new material
With new material
and price
increase
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