Bristol Solution 2020.docx - BRISTOL SOLUTION COST...

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BRISTOL SOLUTION:COST STRUCTURES:Variable Manufacturing Costs:Direct Material12.00Direct Labor5.00Packaging 7.50OTHER VMC8.00Variable Selling and Administrative Costs:Commission8.00 (10% of $80)Shipping5.00TOTAL UVC45.50Fixed Manufacturing Costs:Total in 2020 ($16 x 300,000)=4,800,000 increase by 10% for 2021 =5,280,000Fixed Selling and Administrative Costs:Total in 2020($14 x 300,000)=4,200,000 increase by 10% for 2021=4,620,0009,900,0001A. TFC + TPbefore taxes/(SP-UVC)=Breakeven in units9,900,000/(80-45.50)= 286,957 UNITS FOR BREAK EVEN1B.NET INCOME OF 1,800,000 EQUALS INC. BEFORE TAXES OF (1,800,000/(1-.4)) OR 3,000,0009,900,000 + 3,000,000/(80-45.50)= 373,913 UNITS FOR BREAK EVEN*AMOUNT EXCEEDS CAPACITY*MUST ADD NEW MACHINE 50,000+ 9,900,000 + 3,000,000/80-45.50= 375,362 UNITS FOR BREAKEVEN

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