Break-even analysis

Break-even analysis - Setup Information Brian Lindquist...

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Setup Information Brian Lindquist 0.08 Peso? (1=Yes) - 1.00 10.814 Mexican Pesos = 1.000 US Dollars Income Information-Current Standards Current Hi-Tech Broker Production Current Production = Sales Forecast Mid-Grade 2,585.00 3,878.00 3,878.00 Production can be increased by 50% and the broker also anticipates that same level High-End 517.00 776.00 776.00 Production can be increased by 50% Direct Materials ($)/Unit Mid-Grade 140.00 140.00 There are no material costs for brokered units High-End 250.00 250.00 250.00 Direct Labor ($/HR)/Unit 15.00 40.00 40.00 The labor rate is increased due to the technical skill level of operators Labor Time (Hrs)/Unit Mid-Grade 20.00 4.00 There are no labor times for brokered units and production times are 20% of original times High-End 30.00 4.00 4.00 Production times are now equal to the mid-grade level Direct Cost/Unit Mid-Grade 440.00 300.00 360.00 The Broker cost for Mid-Grade is based on net FOB destination including shipping/tariffs High-End 700.00 410.00 410.00 Price/Unit Mid-Grade 509.00 459.00 459.00 Prices are reduced by 10% because supply is increased High-End 879.00 789.00 789.00 Prices are reduced by 10% because supply is increased Plant Overhead/Yr Salaries 50,000 95,000 95,000 Need to add a 45,000 a year maintenance position for the equipment Utilities 9,000 27,000 4,502 Utilities are expected to be 3 x's current at full production (150% above current levels) based on units produced Benefits 105,815 83,964 21,916 Benefits are 10% of all wages (including direct labor) Insurance 3,000 15,000 15,000 Insurance will increase by 12,000 with the addition of the equipment and building expansion Property Taxes 975 3,900 3,900 Property taxes are 6.5%, assessment is 1% of original value, and that is on all plant/equipment Depreciation 50,000 466,667 466,667 Buildings are at 30 years and Equipment is at 10 years, straight line Supplies 6,000 6,000 6,000 Supply expense is miscellaneous and does not vary Income Tax Expense 19,370 89,534 27,317 Taxes are 42% of Net Income 270,908 910,706 678,026 Net Margins 224,790 697,531 612,985 Overhead 46,118 213,175 65,041 Net Income before taxes
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This note was uploaded on 07/18/2011 for the course ACC 561 taught by Professor Cole during the Spring '09 term at University of Phoenix.

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Break-even analysis - Setup Information Brian Lindquist...

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