Question
In: Accounting
Vernon Corporation is a manufacturing company that makes small electric motors it sells for $52 per...
Vernon Corporation is a manufacturing company that makes small electric motors it sells for $52 per unit. The variable costs of production are $28 per motor, and annual fixed costs of production are $576,000. Required How many units of product must Vernon make and sell to break even? How many units of product must Vernon make and sell to earn a $72,000 profit? The marketing manager believes that sales would increase dramatically if the price were reduced to $46 per unit. How many units of product must Vernon make and sell to earn a $72,000 profit, if the sales price is set at $46 per unit?
Solutions
Expert Solution
1)Units to breakeven = Fixed cost /(price- variable cost)
= 576000/(52-28)
= 576000/ 24
= 24000 units
2)Target unit sales =[fixed cost+ target profit ]/[price-variable cost]
=[576000+72000]/[52-28]
= 648000/24
= 27000 units
3)Target unit sales = [576000+72000]/[46-28]
= 648000/18
= 36000 units
ekkarill92 answered 1 year agoRelated Solutions
Ritchie Manufacturing Company makes a product that it sells for $130 per unit. The company incurs...
Ritchie Manufacturing Company makes a product that it sells for
$130 per unit. The company incurs variable manufacturing costs of
$66 per unit. Variable selling expenses are $12 per unit, annual
fixed manufacturing costs are $450,000, and fixed selling and
administrative costs are $226,000 per year.
Required
Determine the break-even point in units and dollars using each
of the following approaches:
Use the equation method.
Use the contribution margin per unit approach.
Prepare a contribution margin income statement for the...
Ritchie Manufacturing Company makes a product that it sells for $140 per unit. The company incurs...
Ritchie Manufacturing Company makes a product that it sells for
$140 per unit. The company incurs variable manufacturing costs of
$73 per unit. Variable selling expenses are $11 per unit, annual
fixed manufacturing costs are $468,000, and fixed selling and
administrative costs are $271,200 per year.
Required
Determine the break-even point in units and dollars using each
of the following approaches:
Use the equation method.
Use the contribution margin per unit approach.
Prepare a contribution margin income statement for the...
Ritchie Manufacturing Company makes a product that it sells for $190 per unit. The company incurs...
Ritchie Manufacturing Company makes a product that it sells for
$190 per unit. The company incurs variable manufacturing costs of
$96 per unit. Variable selling expenses are $18 per unit, annual
fixed manufacturing costs are $462,000, and fixed selling and
administrative costs are $260,000 per year.
Required
Determine the break-even point in units and dollars using each
of the following approaches:
Use the equation method.
Use the contribution margin per unit approach.
Prepare a contribution margin income statement for the...
Vernon Manufacturing Co. produces and sells specialized equipment used in the petroleum industry. The company is...
Vernon Manufacturing Co. produces and sells specialized
equipment used in the petroleum industry. The company is organized
into three separate operating branches: Division A, which
manufactures and sells heavy equipment; Division B, which
manufactures and sells hand tools; and Division C, which makes and
sells electric motors. Each division is housed in a separate
manufacturing facility. Company headquarters is located in a
separate building. In recent years, Division B has been operating
at a net loss and is expected to...
Vernon Manufacturing Co. produces and sells specialized equipment used in the petroleum industry. The company is...
Vernon Manufacturing Co. produces and sells specialized
equipment used in the petroleum industry. The company is organized
into three separate operating branches: Division A, which
manufactures and sells heavy equipment; Division B, which
manufactures and sells hand tools; and Division C, which makes and
sells electric motors. Each division is housed in a separate
manufacturing facility. Company headquarters is located in a
separate building. In recent years, Division B has been operating
at a net loss and is expected to...
Baird Manufacturing Company makes a product that sells for $75 30 per unit Manufacturing costs for the product
Problem 11-23A (Algo) Absorption versus variable costing LO 11-4
Baird Manufacturing Company makes a product that sells for $75 30 per unit Manufacturing costs for the product amount to $26.00 per unit variable, and $74,520 feed. During the current accounting period, Baird made 3.600 units of the product and sold 3.200 units Selling and administrative expenses were zero."
Required
a. Prepare an absorption costing income statement.
b. Prepare a variable costing income statement. Complete this question by entering...
Alabama Company makes and sells electric fans. Its manufacturing factory in Mainland China utilizes around 90%...
Alabama Company makes and sells electric fans. Its manufacturing
factory in Mainland China utilizes around 90% of its production
capacity. Its Hong Kong selling office distributes the electric
fans only to local wholesalers. Traditionally, the company’s sales
have been in the following categories: 25% cash sales; and around
75% sales on account (due in 60 days). Uncollectible accounts
expense was approximately 1% of net sales. With these policies,
Alabama earned a modest profit, and monthly cash receipts exceeded
monthly cash...
Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $32. The following...
Landor Appliance Corporation makes and sells electric fans. Each
fan regularly sells for $32. The following cost data per fan is
based on a full capacity of 160,000 fans produced each period.
Direct materials$9Direct labor$9Manufacturing overhead (50%
variable and 50% unavoidable fixed)$6 A special order has been
received by Landor for a sale of 30,000 fans to an overseas
customer. The only selling costs that would be incurred on this
order would be $3 per fan for shipping. Landor is...
Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $48. The following...
Landor Appliance Corporation makes and sells electric fans. Each
fan regularly sells for $48. The following cost data per fan is
based on a full capacity of 151,000 fans produced each period.
Direct materials
$
7
Direct labor
$
9
Manufacturing overhead (50% variable and 50% unavoidable
fixed)
$
6
A special order has been received by Landor for a sale of 25,000
fans to an overseas customer. The only selling costs that would be
incurred on this order would...
Morelli Electric Motor Corporation manufactures electric motors for commercial use. The company produces three models, designated...
Morelli Electric Motor Corporation manufactures electric motors
for commercial use. The company produces three models, designated
as standard, deluxe, and heavy-duty. The company uses a job-order
cost-accounting system with manufacturing overhead applied on the
basis of direct-labor hours. The system has been in place with
little change for 25 years. Product costs and annual sales data are
as follows:
Standard Model
Deluxe Model
Heavy-Duty Model
Annual sales (units)
19,000
1,500
9,400
Product costs:
Raw material
$
18
$
33...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Read at least 2 academically reviewed articles and Write an annotated bibliography paper on Master Budgeting
- Why normalization and referential integrity are important principles when designing relational databases?
- Respond to the following in a minimum of 175 words: Discuss what elements should be present...
- 1) The 3rd bright fringe of a double slit interference pattern is 30.0 cm above the...
- A solar cell generates a potential difference of 0.320 V when a 445.0 ? resistor is...
- A ceiling fan consists of a small cylindrical disk with 5 thin rods coming from the...
- You measure the following quantities as A = 1.0 m ± 0.2 m, B = 2.0...
ADVERTISEMENT