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Accounting 122 Group Project 2 Cascade Company estimated the following variable and fixed cost for the...

Accounting 122 Group Project 2

Cascade Company estimated the following variable and fixed cost for the only product it produces:

Variable Cost Per Unit

Fixed Cost

Direct Materials

$132.30

$ 0

Direct Labor

$115.30

$ 0

Factory Overhead

$24.50

$264,000

Sales Salaries and Commissions

$12.70

$245,000

Advertising

$0

$75,000

Travel

$0

$39,500

Misc. Selling Expenses

$6.70

$24,500

Office and Officer Salaries

                      $0

$220,000

Supplies

$6.30

$15,000

Misc. Administrative Expenses

$2.20

$17,000

Prepare an estimated Contribution Margin Income Statement for the year ended December 31, 2018. (6,000 units are to be produced and sold). Assume the estimated sales price will be $500 per unit. Include one category for variable cost and one category for fixed cost.

Compute the break-even point in units and sales dollars

Compute the break-even point in units and sales dollars assuming the changed facts below:

The sales staff will now handle all of the advertising cost and their sales commission will be increased to 10% of every sales dollar. Remember, the sales price per unit is $500.

The sales staff will also have their fixed salaries decrease by $100,000.

All other facts will remain unchanged.

Which alternative would you select assuming that Cascade will sell at least 5,000 units? Why?

Referring to the original facts; what is the sales in units and sales dollars required to generate a 12% Operating Income as a percentage of Sales?

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ekkarill92 answered 1 year ago
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