I was wondering if you can help me with : 1)Dakota company provides the followin

Question

I was wondering if you can help me with :

1)Dakota company provides the following information about its single products.

Targeted Operating Income $40,000

Selling price per unit $3.50

Variable Cost per unit $ 1.05

Total fixed cost $ 90,000

how many units must be sold to earn the targeted operating income ?

2)Woodson Corporation provided the following information regarding its only product:

Assume there is excess capacity,

what would be the effect on operating income of accepting a special order for 1,200 units at a sale of $60 per product assuming additional manufacturing overhead costs of $5,000 is incurred ?

( Note assume regular sales are not affected by the special order.

3) Belton comapny currently sells its products for $25 per unit. Management is comtemplating a 20% increase inthe sale price for the next year. Variable costs are currently 30% of sales revenues and are not expected to change net year. Fixed expenses are $150,000 per year. if fixed costs increase 10% next year, and the new sale price per unit goes into effect, how many units will need to be sold to breakeven? 4) Sunbucks Coffe sells three large coffees for every two small ones. A small coffee sells for $3 per cup, with a variable cost of $1.50 per cup. A large coffee sells for $5 per cup with a variable cost of $3 per cup. What is the weighted average contribution margin ? what is the breakeven sales dollars and units, is fixed costs were $7,000 ?

Sale price per unit $65,000 Direct material used $160,000 Direct labor incurred $185,000 Variable manufacturing overhead $120,000 Variable selling and administrative expense $70,000 Fixed manufacturing overhead $65,000 Fixed selling and administrative expense $12,000 Unit produced and sold $10,000 Assume no begining inventory

Explanation / Answer

Solution :

1..

SP

3.5

LESS : VC

-1.5

CONTRIBUTION

2

Targeted Operating Income

40000

ADD : FIXED COST

90000

CONTRIBUTION

130000

SALES IN NO OF UNITS = CONTRIBUTION/CONTRIBUTION PER UNIT (130000/2)

65000

SALES IN DOLLARS (65000*3.5)

227500

2..

Per unit

sale price of special order

60

Less : Variable cost

Direct material used

16

Direct labor incurred

18.5

Variable manufacturing overhead

12

Variable selling and administrative expense

7

total variable cost

53.5

contribution

6.5

Contribution in dollar (1200 units *6.5)

7800

Less : additional fixed cost

5000

operating profit increase by

2800

3..

new sale price (25*1.2)

30

Less : vc

9

contribution

21

Break even units =fixed cost/contribution per unit = 165000/21

            7,858

4..

LARGE

SMALL

Total

SP

5

3

8

VC

3

1.5

4.5

contribution

2

1.5

3.5

Xpropoation 3/5,2/5

0.6

0.4

Weighted contribution margin

1.2

0.6

1.8

Fixed cost

7000

Total Break even in units =fixed cost*/total weighted contribution

                      3,889

BEP in units (in ratio 3:2) (3889*3/5),(3889*2/5)

            2,333

             1,556

                      3,889

BEP in sales

          11,667

             4,667

SP

3.5

LESS : VC

-1.5

CONTRIBUTION

2

Targeted Operating Income

40000

ADD : FIXED COST

90000

CONTRIBUTION

130000

SALES IN NO OF UNITS = CONTRIBUTION/CONTRIBUTION PER UNIT (130000/2)

65000

SALES IN DOLLARS (65000*3.5)

227500

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