Question
In: Accounting
Wyatt Inc., a multinational manufacturing firm involved in production of architectural millwork like custom molding, panels,...
Wyatt Inc., a multinational manufacturing firm involved in production of architectural millwork like custom molding, panels, book cases and others. Suppose that the Wyatt Inc. is involved in the production of the molding and it is expected to maintain same inventory at the end of the year as at the beginning of the year. Let us suppose the estimated fixed cost is $288, 000, and the estimated variable costs per unit are $14. Also assume that 60,000 units will be sold at price of $20 per unit (Waren). The maximum sales within the relevant range are 70,000 units. Calculate the following:
Questions
Calculate the contribution margin ratio and unit contribution margin.
Find out the break-even point in units.
Determine the margin of safety.
Draw a Cost-Volume-Profit graph and attach it to your posting
What are some things that would increase the break-even in units?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Wyatt Inc., a multinational manufacturing firm involved in production of architectural millwork like custom molding, panels,...
Wyatt Inc., a multinational manufacturing firm involved in
production of architectural millwork like custom molding, panels,
book cases and others. Suppose that the Wyatt Inc. is involved in
the production of the molding and it is expected to maintain same
inventory at the end of the year as at the beginning of the year.
Let us suppose the estimated fixed cost is $288, 000, and the
estimated variable costs per unit are $14. Also assume that 60,000
units will be...
Zen Manufacturing Inc. is a multinational firm with sales and manufacturing units in 15 countries. One...
Zen Manufacturing Inc. is a multinational firm with sales and
manufacturing units in 15 countries. One of its manufacturing
units, in country X, sells its product to a retail unit in country
Y for $304,000. The unit in country X has manufacturing costs of
$152,500 for these products. The retail unit in country Y sells the
product to final customers for $452,500. Zen is considering
adjusting its transfer prices to reduce overall corporate tax
liability.
Required:
1. Assume that both...
PowerAir Inc., a subsidiary of a successful multinational manufacturing firm, supplies a key component in the...
PowerAir Inc., a subsidiary of a successful multinational
manufacturing firm, supplies a key component in the assembly of
residential air conditioning units. At this current stage, there
are only five suppliers of this particular component, with these
suppliers accounting for close to 80 percent of worldwide industry
sales. On the retail side of the equation, well-known residential
air conditioning units like Carrier and Trane retain a strong
foothold in terms of retail sales. However, some newer Asian
manufacturers have signaled...
PowerAir Inc., a subsidiary of a successful multinational manufacturing firm, supplies a key component in the...
PowerAir Inc., a subsidiary of a successful multinational
manufacturing firm, supplies a key component in the assembly of
residential air conditioning units. At this current stage, there
are only five suppliers of this particular component, with these
suppliers accounting for close to 80 percent of worldwide industry
sales. On the retail side of the equation, well-known residential
air conditioning units like Carrier and Trane retain a strong
foothold in terms of retail sales. However, some newer Asian
manufacturers have signaled...
PowerAir Inc., a subsidiary of a successful multinational manufacturing firm, supplies a key component in the...
PowerAir Inc., a subsidiary of a successful multinational
manufacturing firm, supplies a key component in the assembly of
residential air conditioning units. At this current stage, there
are only five suppliers of this particular component, with these
suppliers accounting for close to 80 percent of worldwide industry
sales. On the retail side of the equation, well-known residential
air conditioning units like Carrier and Trane retain a strong
foothold in terms of retail sales. However, some newer Asian
manufacturers have signaled...
PowerAir Inc., a subsidiary of a successful multinational manufacturing firm, supplies a key component in the...
PowerAir Inc., a subsidiary of a successful multinational
manufacturing firm, supplies a key component in the assembly of
residential air conditioning units. At this current stage, there
are only five suppliers of this particular component, with these
suppliers accounting for close to 80 percent of worldwide industry
sales. On the retail side of the equation, well-known residential
air conditioning units like Carrier and Trane retain a strong
foothold in terms of retail sales. However, some newer Asian
manufacturers have signaled...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both
involved in the production of brick for the homebuilding industry.
Their financial information is as follows:
Sinclair
Boswell
Capital
Structure
Debt @ 10%
$
1,920,000
0
Common stock, $10 per share
1,280,000
$
3,200,000
Total
$
3,200,000
$
3,200,000
Common shares
128,000
320,000
Operating
Plan:
Sales (72,000 units at $15
each)
$
1,080,000
$
1,080,000
Variable costs
864,000
432,000
Fixed costs
0
322,000
Earnings before interest and
taxes (EBIT)
$
216,000
$...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both
involved in the production of brick for the homebuilding industry.
Their financial information is as follows: Sinclair Boswell Capital
Structure Debt @ 11% $ 1,080,000 0 Common stock, $10 per share
720,000 $ 1,800,000 Total $ 1,800,000 $ 1,800,000 Common shares
72,000 180,000 Operating Plan: Sales (58,000 units at $20 each) $
1,160,000 $ 1,160,000 Variable costs 928,000 580,000 Fixed costs 0
308,000 Earnings before interest and taxes (EBIT) $ 232,000 $...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both
involved in the production of brick for the homebuilding industry.
Their financial information is as follows:
Sinclair
Boswell
Capital
Structure
Debt @ 10%
$
1,740,000
0
Common stock, $10 per share
1,160,000
$
2,900,000
Total
$
2,900,000
$
2,900,000
Common shares
116,000
290,000
Operating
Plan:
Sales (69,000 units at $15
each)
$
1,035,000
$
1,035,000
Variable costs
828,000
414,000
Fixed costs
0
319,000
Earnings before interest and
taxes (EBIT)
$
207,000
$...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of tile for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both
involved in the production of tile for the home-building industry.
Their financial information is as follows:
Capital Structure
Sinclair
Boswell
Debt @ 12%
$1,320,000
0
Common stock, $10 per share
880,000
$2,200,000
$2,200,000
$2,200,000
Common shares
88,000
220,000
Operating Plan
Sales (62,000 units at $25 each)
$1,550,000
$1,550,000
Less: Variable costs
1,116,000
744,000
($18 per unit)
($12 per unit) ...
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