Mozena Corporation has collected the following information after its first year

Question

Mozena Corporation has collected the following information after its first year of sales. Sales were $1,600,000 on 100,000 units; selling expenses $248,400 (40% variable and 60% fixed); direct materials $513,000; direct labor $363,880; administrative expenses $282,600 (20% variable and 80% fixed); manufacturing overhead $353,200 (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.

Compute (1) the contribution margin for the current year and the projected year, and (2) the fixed costs for the current year. (Assume that fixed costs will remain the same in the projected year.)

(1) Contribution margin for current year $

Contribution margin for projected year $

(2) Fixed Costs $

Explanation / Answer

Contribution Particulars Current Year $ Proposed Year $ Sales     1,600,000     1,760,000 Less: Variable Cost Materials        513,000        564,300 Labour        363,880        400,268 Administration Expenses          56,520          62,172 Manufacturing Overhead        247,240        271,964 Selling Expenses          99,360        109,296 Contribution        320,000        352,000 Fixed Cost For Current Year Particulars Current Year $ Administration Expenses        226,080 Manufacturing Overhead        105,960 Selling Expenses        149,040 Total FC        481,080

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