The costing manager for B.E. Industries is tasked with forecasting expected brea

Question

The costing manager for B.E. Industries is tasked with forecasting expected breakeven and profitability levels for its Cost Cover Division. Although the expectation is that the division will be profitable next year, the fear is that continued slow growth in the local economy will cause the division to struggle to reach breakeven. As part of the forecast, the manager must be prepared to explain the impact on various cost components of changes in certain assumptions.

Using the information included within the Resources tab, complete the tables below for B.E. Now Industries.

• For Table 1, calculate the required amounts identified in column A and enter your associated response in units or dollars in column B. • For Table 2, determine the impact of the change identified in the first column and enter the impact in second column. Variable Costing Resources Help The costing manager for B.E. Industries is tasked with forecasting expected breakeven and profitability levels for its Cost Cover Division. Although the expectation is that the division will be profitable next year, the fear is that continued slow growth in the local economy will cause the division to struggle to reach breakeven. As part of the forecast, the manager must be prepared to explain the impact on various cost components of changes in certain assumptions Using the information included within the Resources tab, complete the tables below for B.E. Now Industries. For Table 1, calculate the required amounts identified in column A and enter your associated response in units or dollars in column B . For Table 2, determine the impact of the change identified in the first column and enter the impact in second column Table 1: 1 Calculation Amount 123 2 1. Breakeven point (in units)

Explanation / Answer

Table-1 A B Working 1 BreakEven Point ( In units) 30000 $810000/27) 2 BreakEven Point ( In $) $2,700,000 (30000*$90) 3 Unit need to Earn desired Profit 35000 ($810000+$135000)/$27) 4 Sales Dollar needed for desired Profit $3,150,000 (35000*$90) Table-2 5 Inpact on Contribution Margin if fixed Cost increase by $40000 No Impact 6 Inpact on Contribution Margin Ratio if per Unti Sales and Variable both decrease by $10 No Impact ($80-$53)=$27 7 Inpact on total Variable Cost if desired Profit increased by $50000 No Impact Desired Profit have no impact on Variable Cost 8 Impact on Breakeven unit if tax rate decrease to 30% No Impact

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