[The following information applies to the questions displayed below.] Burchard Company sold 42,000 units of its only product for $17.40 per unit this year. Manufacturing and selling the product required $314,000 of fixed costs. Its per unit variable costs follow. Direct materials Direct labor Variable overhead costs Variable selling and administrative costs $ 4.70 3.70 0.47 0.27 For the next year, management will use a new material, which will reduce direct materials costs to $1.41 per unit and reduce direct labor costs to $2.59 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 $22.62 per unit, which would decrease unit sales volume to 35,700 units. . 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.

[The following information applies to the questions displayed below.] Burchard Company sold 42,000 units of its only product for $17.40 per unit this year. Manufacturing and selling the product required $314,000 of fixed costs. Its per unit variable costs follow. Direct materials Direct labor Variable overhead costs Variable selling and administrative costs $ 4.70 3.70 0.47 0.27 For the next year, management will use a new material, which will reduce direct materials costs to $1.41 per unit and reduce direct labor costs to $2.59 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 $22.62 per unit, which would decrease unit sales volume to 35,700 units. . 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.

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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Required information [The following information applies to the questions displayed below.] Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 6,850 rackets and sold 5,330. Each racket was sold at a price of $90. Fixed overhead costs are $89,050 per year, and fixed selling and administrative costs are $67,000 per year. The company also reports the following per unit variable costs for the year. Direct materials Direct labor Variable overhead Variable selling and administrative expenses Prepare an income statement under variable costing. ACES INCORPORATED Income Statement (Variable Costing) Sales Less: Variable expenses Variable cost of goods sold Vanable selling and administrative expenses Contribution margin Fixed overhead Fixed selling and administrative expenses 333 X x X > $ 89,050✔ 67,000 $479,700 335,790 $12 8 5 2 156,050 Income $ 179,740 "Red text indicates no response was expected in a cell or a formula-based calculation is…
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