1. Winthrop Manufacturing produces a product that sells for $50.00. Fixed costs
ID: 2358474 • Letter: 1
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1. Winthrop Manufacturing produces a product that sells for $50.00. Fixed costs are $260,000 and variable costs are $24.00 per unit. Winthrop can buy a new production machine that will increase fixed costs by $11,400 per year, but will decrease variable costs by $3.50 per unit. Compute break-even point in dollars with the purchase of the new machine. -------A. $500,000.-------B.$440,678.-------C.$521,923.-------D.$480,000.-------E. $460,000. 2. Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Compute the contribution margin ratio. -------A.37.5%. -------B 62.5%.-------C. 55.0%------D.. 50.0%.-------E. 47.5%. 3. Winthrop Manufacturing produces a product that sells for $50.00. Fixed costs are $260,000 and variable costs are $24.00 per unit. Winthrop can buy a new production machine that will increase fixed costs by $11,400 per year, but will decrease variable costs by $3.50 per unit. Compute the contribution margin per unit if the machine is purchased. -------A.$22.50-------B.$26.00.-------C. $29.50------D.$28.50------E..$27.50. 4. Winthrop Manufacturing produces a product that sells for $50.00. Fixed costs are $260,000 and variable costs are $24.00 per unit. Winthrop can buy a new production machine that will increase fixed costs by $11,400 per year, but will decrease variable costs by $3.50 per unit. Compute break-even point in units if the new machine is purchased. -------A.10,438 units. ------B.8,814 units. -------C. 10,000 units. ------D.9,200 units.-----E. 9,869 units. 5. Winthrop Manufacturing produces a product that sells for $50.00. Fixed costs are $260,000 and variable costs are $24.00 per unit. Winthrop can buy a new production machine that will increase fixed costs by $11,400 per year, but will decrease variable costs by $3.50 per unit. What effect would the purchase of the new machine have on Winthrop's break-even point in units? ------A.800 unit increase. ------B800 unit decrease. -------C. 5,714 unit increase. ------D.4,444 unit decrease. ----E. No effect on the break-even point in units.Explanation / Answer
Hi, Please find the answers as follows: a) =260000 + 11400/50 - 20.5 = 9200 units * 50 = 460000 b) = 4200000/480 = 8750 units, variable cost = 8750*300 = 2625000, Contribution Ratio = Sales - VC/Sales * 100 = (4200000 - 2625000)/4200000 = 37.5% c) =50 - 20.5 = 29.5 per unit d) =260000 + 11400/50 - 20.5 = 9200 units e) 800 units decrease. Thanks, Aman
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