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# Wk 3 HW PM - Question 2-48 pg 82 Sales(\$68,222 x 1.1 =...

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Question 2-48 pg. 82 Sales (\$68,222 x 1.1) = \$75,044 COG (\$33,125 x 1.1) = \$36,438 Selling/General/Admin Exp = \$21,848 (no change) Operating Income = \$16,758.00 Percentage Increase: (\$16,758-\$13,249)/\$13,249= 26.5% There was not an increase in all cost which caused the operating income to change from 2006 to 2007. The COG may always increase because it is considered a variable cost. Due to the increase in sales, the percentage increase is much higher. Question 2-61, CVP in a Modern Manufacturing Company, on p. 87 1. Compute the budgeted profit at the expected volume of 600,000 units under both the old and the new production environments. Old Production Operation New Production Operation Sales (600,000 X 3.10): 1,860,000 1,860,000 Less: Variable Costs: (600,000 x 2.10, 1.10) 1,260,000 660,000 Contribution Margin: 600,000 1,200,000 Less: Fixed Costs: 580,000 1,140,000 Net Income: 20,000 60,000 2. Compute the budgeted break-even point under both the old and the new production environments. Unit Contribution Margin \$3.10-\$2.10=\$1.00 \$3.10-\$1.10=\$2.00 Fixed Cost 580,000 1,140,000 Break Even Units (FC/UCM) 580,000/1=580,000 1140,000/2=570,000 Break Even Sales 580,000x3.10=\$1,798,000 570,000 x 3.10= \$1,767,000 Fixed Cost/Unit Contribution Margin Old=580,000 New=570,000 3. Discuss the effect on profits if volume falls to 500,000 units under both the old and the

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Wk 3 HW PM - Question 2-48 pg 82 Sales(\$68,222 x 1.1 =...

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