ac420chap9and10template

ac420chap9and10template - purchase. But the new one is the...

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Nicole Badgley Unit 7 16. a. Contribution margin per unit = Sales less variable costs $50 + $60 + $34 = $144 variable costs. $360 - $144 = $216 contribution margin per unit b. Contribution margin ratio= contribution margin ÷ sales $216 / $360 = 0.6 c. Breakeven in units is fixed costs ÷ contribution margin per unit $125,280 / $144 = 870 units d. Breakeven in dollars is fixed costs ÷ contribution margin ratio $125,280 + $51,840 = $177,120 $177,120 / 0.6 = 295,200 units e. To earn $51,840 in pretax profit, Bill’s Cabinets must sell: To earn a profit of $51,840 the company must sell 295,200 units. 10-16. The two factors that need to be considered is one is the qualitative factor and other is quantitative factor. Under the quantitative factor the difference between new and repaired dollars should be compared, definitely, there is saving of $15 if repaired against new
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Unformatted text preview: purchase. But the new one is the new one, therefore it seems better to buy new one for the difference of $15. Moreover, the new piece will be covered under repair warranty; therefore, it will be worthy to pay additional dollars to cover the repair warranty. 22. a. MP3 Players PDAs Contribution margin $ Divide by labor time per unit CM per unit of labor time $ b. 27. a. Only the variable production costs are relevant to this decision: The costs that are relevant to accept the special order is: Direct materials 520 Direct labor 40 Variable overhead 50 Total 610 b. Incremental revenue: $ x 200 620*200=124,000 Incremental costs: $ x 200 610*200=122,000 Incremental profit $2,000 $ So the profit would increase by $2000 if this special order was accepted....
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ac420chap9and10template - purchase. But the new one is the...

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