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 $2,377,600 on 148,600 units; selling expenses $356,640 (40% variable and 60% fixed); direct materials $759,346; direct labor $423,510; administrative expenses $416,080 (20% variable and 80% fixed); manufacturing overhead $534,960 (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 Your answer is correct. 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 for current year $
Lorge Corporation has collected the following information after its first year of sales. Sales were $2,377,600 on 148,600 units; selling expenses $356,640 (40% variable and 60% fixed); direct materials $759,346; direct labor $423,510; administrative expenses $416,080 (20% variable and 80% fixed); manufacturing overhead $534,960 (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.) Compute the break-even point in units and sales dollars for the first year.

Explanation / Answer

total variable cost per unit =sales/units - contribution margin = 2377600/148600 - 4=12

total fixed cost per unit =707336

let x no of units produced

net income= 16x-12x-707336

460660=4x-707336

x=(707336+460660)/4 = 291999 units

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.