Lorge Corporation has collected the following information after its first year o

Question

Lorge Corporation has collected the following information after its first year of sales. Sales were $2,118,400 on 132,400 units; selling expenses $317,760 (40% variable and 60% fixed); direct materials $676,564; direct labor $377,340; administrative expenses $370,720 (20% variable and 80% fixed); manufacturing overhead $476,640 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.

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2)Break even point in sales

3)BEP in units

4)BEP in sales price

Lorge Corporation has collected the following information after its first year of sales. Sales were $2,118,400 on 132,400 units; selling expenses $317,760 (40% variable and 60% fixed); direct materials $676,564; direct labor $377,340; administrative expenses $370,720 (20% variable and 80% fixed); manufacturing overhead $476,640 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.

Explanation / Answer

Contribution margin of current year Sales revenue 2118400 Less: variable cost Direct material 676564 Direct labour 377340 Mannufacturing OH (476640*70%) 333648 Admin Expennse (370720*20%) 74144 Selling expense (317760*40%) 127104 Contribution margin of current year 529600 Contribution margin of Projected Yyear: Sales revenue (2118400+10%) 2330240 Less: Variable cost Material (676564+10%) 744220.4 Labouor (377340+10%) 415074 Mannufacturing OH (333648+10%) 367012.8 Admin Expense (74144+10%) 81558.4 Selling expense (127104+10%) 139814.4 Contribution margin of Projected Yyear: 582560 Total fixed cost: Manufacturing OH (476640*30%) 142992 Admin Expense (370720*80%) 296576 Selling expense (317760*60%) 190656 Total fixed cost: 630224

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