iPad 7:49 PM 16% Assignment 1 Cost Accounting Assignment 1.rtf developed its bud
ID: 2539153 • Letter: I
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iPad 7:49 PM 16% Assignment 1 Cost Accounting Assignment 1.rtf developed its budget for the current year assuming that the windows would sell at a price of $400 each. The variable costs for each window were forecasted to be $200 and the annual fixed costs were forecasted to be S100,000. Clifford had targeted a profit of S400,000 While Clifford 's sales usually rise during the second quarter the May financial statements reported that sales were not meeting expectations. For the first five months of the year, only 350 units had been sold at the established price, with variable cost as planned, and it was clear that the target profit for the year would not be reached unless some actions were taken. Clifford's president assigned a management committee to analyze the situation and develop several alternative courscs of action. The following three alternatives were presented to the president, only one of which can be selected. 1. Reduce the selling price by $40.Te marketing department forecasts that with the lower price, 2,700 units could be sold during the remainder of the ycar 2. Lower variable costs per unit by $25 through the use of less expensive materials. Because of the difference in materials, the selling price would have to be lowered by $30 and sales of 2,200 units for the remainder of the year are forecast. 3. Cut fixed costs by $10,000 and lower the selling price by 5 percent. Sales of 2,000 units would be expected for the remainder of the year Required: a. If no changes are made to the selling price or cost structure, cstimate the number of units that must be sold during the ycar to break-even. b. If no changes are made to the seling price or cost structure, estimate the number of units that must be sold during the year to attain the target profit of $400,000 mine which of the alternatives C lifford's president should sel ect to maximize profit C. Answers: You nust show your work for each answer in order to receive credit for this problem. a. Unit sales to brcak even b. Unit sales to attain target profit c. Which alternative should be selected? Profit = Sales-Variable costs-Fixed costs Alternative 1 Sales Variable costs Fixed costs $ 100,000 Profit- Alternative 2: Sales Variable costs Fixed costs $100,000 Profit- Alternative 3: Sales Variable costs = Fixed costs Profit Conclusion: Which alternative do you recommend and why Dashboard Cendar Notifications Inbox -10 DoExplanation / Answer
a.
b.
C.1
2
3.
Alternative 1 is the best as it gives the maximum profit of $ 332,000.
Formulas/Calculation S. No. Item Formula Calculation Net Result Break Even Units Fixed Cost / Contribution per unit 100,000 / 200 500Related Questions
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