Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Question
Chapter 20, Problem 2PA
1.
To determine
Calculate the total fixed costs and the total variable costs for the current year.
2(a)
To determine
Calculate the unit variable cost for the current year.
2(b)
To determine
Calculate the unit contribution margin for the current year.
3.
To determine
Compute the break-even sales (units) for the current year.
4.
To determine
Compute the break-even sales (units) under the proposed program for the following year.
5.
To determine
Calculate the amount of sales (units) if the company desires a target profit of $60,000,000.
6.
To determine
Calculate the maximum operating income possible with the expanded plant.
7.
To determine
Calculate the operating income or loss for the following year, if the proposal is accepted and the sales remains same.
8.
To determine
Explain whether to recommend for accepting the proposal.
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Compute the break-even point in dollar sales for next year assuming the machine is installed. Astro Company sold 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year’s activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $142,000. Total units sold and the selling price per unit will not change.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
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Contribution margin
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Chapter 20 Solutions
Financial And Managerial Accounting
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