Blaster Corporation manufactures hiking boots. For the coming year, the company
ID: 2373922 • Letter: B
Question
Blaster Corporation manufactures hiking boots. For the coming year, the company has budgeted the following costs for the production and sale of 30,000 pairs of boots:
Compute the sales price per unit that would result in a budgeted operating income of $900,000, assuming that the company produces and sells 30,000 pairs. (Hint: First compute the budgeted sales revenue needed to produce this operating income.) (Omit the "$" sign in your response.)
Assuming that the company decides to sell the boots at a unit price of $121 per pair.
Compute the amount of total fixed costs budgeted for the year. (Omit the "$" sign in your response.)
Compute the amount of variable costs per unit. (Omit the "$" sign in your response.)
Compute the amount of the unit contribution margin. (Omit the "$" sign in your response.)
Compute the number of pairs that must be produced and sold annually to break even at a sales price of $121 per pair. (Omit the "$" sign in your response.)
Costs
per Pair Percentage
of Costs
Considered
Variable Direct materials $ 630,000 $ 21 100 % Direct labor 300,000 10 100 Manufacturing overhead (fixed and variable) 720,000 24 25 Selling and administrative expenses 600,000 20 20 Totals $ 2,250,000 $ 75
Explanation / Answer
a.
Compute the sales price per unit that would result in a budgeted operating income of $900,000, assuming that the company produces and sells 30,000 pairs. (Hint: First compute the budgeted sales revenue needed to produce this operating income.) (Omit the "$" sign in your response.)
Sales price per unit
$105
Assuming that the company decides to sell the boots at a unit price of $121 per pair.
b-1
Compute the amount of total fixed costs budgeted for the year. (Omit the "$" sign in your response.)
Total fixed costs
$1,020,000
b-2
Compute the amount of variable costs per unit. (Omit the "$" sign in your response.)
Variable costs per unit
$41
b-3
Compute the amount of the unit contribution margin. (Omit the "$" sign in your response.)
Unit contribution margin
$80
b-4
Compute the number of pairs that must be produced and sold annually to break even at a sales price of $121 per pair. (Omit the "$" sign in your response.)
Number of units required to break even
12750
a.
Compute the sales price per unit that would result in a budgeted operating income of $900,000, assuming that the company produces and sells 30,000 pairs. (Hint: First compute the budgeted sales revenue needed to produce this operating income.) (Omit the "$" sign in your response.)
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