Mozena Corporation has collected the following information after its first year
ID: 2462625 • Letter: M
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 $244,000 (40% variable and 60% fixed); direct materials $513,800; direct labor $288,470; administrative expenses $272,500 (20% variable and 80% fixed); manufacturing overhead $350,900 (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.) Contribution margin for current year Contribution margin for projected year Fixed CostsExplanation / Answer
SOLUTION :
Current Year
sales
1600000
variable cost
direct material
513800
direct labor
288470
manufacturing overhead
245630
selling expense
97600
administrative exp
54500
1200000
contribution margin
400000
contribution margin for prohected year
440000
(400000*1.1)
Fixed cost for projected year
manufacturing overhead
105270
selling expense
146400
administrative exp
218000
total fixed cost
469670
Current Year data
sales
1600000
units sales
100000
selling expense
variable
97600
244000*0.4
Fixed
146400
244000*0.6
244000
direct material
513800
direct labor
288470
administrative exp
variable
54500
272500*0.2
fixed
218000
272500*0.8
272500
manufacturing overhead
variable
245630
350900*0.7
fixed
105270
350900*0.3
350900
Current Year
sales
1600000
variable cost
direct material
513800
direct labor
288470
manufacturing overhead
245630
selling expense
97600
administrative exp
54500
1200000
contribution margin
400000
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