company has following data for 2010: sales (80,000 units)...... $5,660,000 cost
ID: 2358867 • Letter: C
Question
company has following data for 2010:
sales (80,000 units)...... $5,660,000
cost of goods sold........$2,100,000
gross profit............$$3,560,000
Expenses:
selling............$$1,500,000
admin. expenses......$900,000
income from operations.....$1,160,000
cost of goods sold is made equally between fixed and variable costs:
fixed costs account for 30%of selling expenses, variable costs account for 70%
variable costs account for 40% of admin. expenses, fixed costs 60%
A new product is being considered for production that may increase sales by $884,375
This new product would increase fixed costs by 265,000- but will not affect relationship between sales/variable costs.
Find the:
total fixed costs
total variable costs
total unit variable cost
unit contribution margin
break even sales
break even unit sales, considering new product
amount of unit sales necessary to keep income the same in 2011 w/new product
max. income from operations possible w/new product
Also if new product is accepted and sales remain the same for 2010, what will income or loss from operations be in 2011?
PLEASE HELP! i have been trying to figure this out for hours, even partial answer will help. anyone who knows how to do this, id REALLY appreciate it!!!
Explanation / Answer
total costs = 2,100,000 + 1,500,000 + 900,000 = 4,500,000 fixed costs = 0.5*2,100,000 + 0.3*1,500,000 + 0.6*900,000 = 2,040,000 so variable costs = 4500000 - 2040000 = 2460000 sales per unit = 4500000/80000 = 56.25 variable cost per unit = 30.75 new product sales increase by = 884375 no of units increased = 884375/56.25 = 15722 total fixed costs = 2040000 + 265000 = 2305000 total variable costs = (80000+15722)*30.75 = 2943452 total unit variable cost = 30.75 unit contribution margin = sales - variable cost = 56.25-30.75 = 25.5 break even unit sales = 2305000/25.5 = 90392units unit sales to keep income same as before 1160000 = 25.5x - 2305000 25.5x = 135882 units
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