DO NOT COPY AND PASTE THE PREVIOUS ANSWERS GIVEN TO ME, IT IS INCORRECT. I WILL
ID: 2456582 • Letter: D
Question
DO NOT COPY AND PASTE THE PREVIOUS ANSWERS GIVEN TO ME, IT IS INCORRECT. I WILL REPORT.
Deng Corp. produces hydraulic lifts that are used by hospitals to move bedridden patients. The costs of manufacturing and marketing the hydraulic lifts at the company’s standard normal volume of 4,200 units per month are as follows:
At a sales price of $6,230 per unit, calculate (a) the break-even volume in units and (b) the break-even sales in dollars. (Round up "Break-even volume in units" to the next whole number. Do not round other intermediate calculations.)
A) What is the break even Volume in units?
B) What is the break even sales in dollars?
Market research indicates that, if the unit sale price were reduced from $6,230 to $5,730, the monthly sales volume would increase to 4,700 units, which is well within production capacity limitations. Assuming the same cost patterns as shown above, what would be the dollar impact on monthly sales, costs, and income?
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Deng is considering implementing a quality inspection system, which will increase the fixed manufacturing overhead costs per unit to $550. However, this will reduce the average materials, labour, and variable overhead costs by $11, $21, and $13 per unit, respectively. Compute the new break-even sales in units and dollars. At a sales level of 4,200 units, will the implementation of the quality inspection system result in a higher profit? Compute the profit impact of this change at a sales level of 4,700 units.(Round up "Break-even volume in units" to the next whole number. Do not round other intermediate calculations.)
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* NOTE 26931000 IS NOT THE 4700 UNITS SALES
4a) What is the break even Volume in units?
4b) What is the break even sales in dollars?
DO NOT COPY AND PASTE THE PREVIOUS ANSWERS GIVEN TO ME, IT IS INCORRECT. I WILL REPORT.
Deng Corp. produces hydraulic lifts that are used by hospitals to move bedridden patients. The costs of manufacturing and marketing the hydraulic lifts at the company’s standard normal volume of 4,200 units per month are as follows:
Explanation / Answer
Calculation and Answers are provided below:
YOU HAVE NOTED THAT THE SALES FIGURE FOR 4700 IS NOT 26931000; BUT IT IS I THINK CORRECT = 4700*5730 = 26931000 UNLESS THE DECREASE IN UNIT PRICE IS ONLY FOR THE INCREASED QUANTITY COST OF MANUFACTURING HYDRAULIC LIFTS Per Unit Total 4200 Variable Cost units Materials 510 2142000 Labour 765 3213000 Overhead 410 1722000 Variable marketing 255 1071000 Total Variable cost 1940 8148000 Fixed cost - Mfg 720 3024000 Fixed - Marketing 685 2877000 Total Fixed cost 1405 5901000 TOTAL COST OF SALES 3345 14049000 BREAK EVEN WITH PRICE OF 6230 6230 Variable cost per unit 1940 Contribution per unit 4290 Contribution ratio 0.6886 BEP in Units = Fixed costs/contribution per unit = 5901000 /4290 = 1375.524 Rounded off to 1376 Units BEP in Dollars = fixed cost/contribution ratio = 5901000/.6886 = 8569517 $ IF PRICE WERE REDUCED TO 5730$ & MONTHLY SALES INCREASD TO 4700 UNITS Per Unit Total Per Unit Total Difference 4200 4700 Price per unit 6230 5730 Income - Sales 26166000 26931000 765000 Variable Cost units Units Materials 510 2142000 510 2397000 255000 Labour 765 3213000 765 3595500 382500 Overhead 410 1722000 410 1927000 205000 Variable marketing 255 1071000 255 1198500 127500 Total Variable cost 1940 8148000 1940 9118000 970000 Fixed cost - Mfg 720 3024000 643 3024000 0 Fixed - Marketing 685 2877000 612 2877000 0 Total Fixed cost 1405 5901000 1256 5901000 0 26931000 Total marketing costs 3345 14049000 3196 15019000 970000 Profit 12117000 11912000 -205000 NO, THE PRICE SHOULD NOT BE REDUCED AS IT IS RESULTING IN REDUCTION IN PROFIT BY $ 205,000 IMPLEMENTING QUALITY INSPECTION SYSTEM Per Unit Total Per unit Total 4200 4700 Variable Cost units Units Materials 499 2095800 499 2345300 Labour 744 3124800 744 3496800 Overhead 397 1667400 397 1865900 Variable marketing 255 1071000 255 1198500 Total Variable cost 1895 7959000 1895 8906500 Fixed cost - Mfg 550 2310000 491 2310000 Fixed - Marketing 685 2877000 612 2877000 Total Fixed cost 1235 5187000 1104 5187000 TOTAL COST OF SALES 3130 13146000 2999 14093500 SALES 6230 26166000 5730 26931000 PROFIT AFTER NEW SYSTEM 13020000 12837500 PROFIT BEFORE 12117000 11912000 YES, PROFIT HAS INCREASED. There seems to be some mistake in the new fixed manufacturing costs per unit as given. It is said that the unit fixed mfg costs will increase to 550; please note that it is 720 even before. Contribution 4335 3835 BEP in units 1197 1353 BEP in $ 7454443 7750068Related Questions
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