Read Me F 18 HW 6 Help Save & Exit Required information The following informatio

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Read Me F 18 HW 6 Help Save & Exit Required information The following information applies to the questions displayed below) This year Burchard Company sold 45,000 units of its only product for $18.00 per unit Manufacturing and selling the 20 product required $130,000 of fixed manufacturing costs and $190.000 of fixed selling and administrative costs, Its per unt variable costs follow $5.00 4/00 Direct labor (paid on the basis of c units) Variable overhead costs Prire 0.30 Next year the company will use new material, which, w" reduce materia" costs by 70% and direct labor costs by 30% and is considering an increase in the unit selling price to r the number of units sold because the factory's output is nearing its annual output capacity of 50,000 units. Two plans are d costs from using the new material Under plan 2, the Under both plans 1 and 2, the total fixed costs and the variable costs per unit for overhead and for selling and administrative costs will remain the by 15%. Prevof Nexr

Explanation / Answer

Solution:

Burchard Company Forecasted contribution margin income statement Particulars Plan 1 Plan 2 Nos of units 45000 38250 Selling price per unit $18.00 $23.40 Sales $810,000.00 $895,050.00 Variable cost: Direct material $67,500.00 $57,375.00 Direct labor $126,000.00 $107,100.00 Variable overhead cost $22,500.00 $19,125.00 Variable selling and administrative cost $13,500.00 $11,475.00 Total variable cost $229,500.00 $195,075.00 Contribution margin $580,500.00 $699,975.00 Fixed Costs: Fixed manufacturing cost $130,000.00 $130,000.00 Fixed selling and administrative cost $190,000.00 $190,000.00 Total Fixed cost $320,000.00 $320,000.00 Net Operating Income $260,500.00 $379,975.00

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