Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Chapter 3, Problem 7EA
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.
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Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.
The following names are to be used when completing this problem:
Operating Income
Variable Costs
Sales
Fixed Costs per Unit
Selling Price per Unit
Variable Cost per Unit
Contribution Margin
Fixed Costs
Operating Loss
If Flanders purchases the new machinery, what will be the company’s break-even point in units? . Use commas as needed (i.e. 1,234).
If Flanders purchases the new machinery, what will be the company’s break-even point in dollars? . Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).
Assuming Flanders purchases the new machinery, construct a contribution margin income statement for sale of 216,000 units. Rounded to whole dollars and shown with "$" and commas as needed (i.e.…
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.
The following names are to be used 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
Revised Fixed costs = 56000 + 18250 = $74250
Variable cost per unit = 1.75 - 0.15 = $1.6 per unit
Contribution margin per unit = Sales price per unit - Variable cost per unit
= 2.15 - 1.6 = $0.55 per unit
Breakeven point in units = Fixed costs/ Breakeven point in units
= 74250/0.55 = 135000 units
Breakeven sales revenue = 135000*2.15 = $290,250
1. Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown…
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Chapter 3 Solutions
Principles of Accounting Volume 2
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