RC2 Produce and sell 10000 units $20.00 60000 units 5000 units $23.00 120000 uni
ID: 2517993 • Letter: R
Question
RC2 Produce and sell 10000 units $20.00 60000 units 5000 units $23.00 120000 units Selling price per unit Manufacturing cost: Parts per unit $5.50 $3.50 200% of D.L $8.40 $4.20 Direct labor Manufacturing Overhead 200% of D-L 200% of D.L Overhead cost per unit Manufacturing cost per unlt 2 Manufacturing overhead: Company $21,000 15000 17000 8000 15000 36000 Supplies Variable Occupancy (utilities, rent, maint.) Equipment maintenance Equipment depreciation Quality cont.& prodection eng. Fixed Manufacturing administration Total Selling & administrative 1. Prepare an annual budget for the Breeden Company 2. Prepare a monthly and annual budget for each product as supporting schedules. Glww tclaf t 3. Assuming that supplies is variable in relation to units and selling and adminitrative is fixed, what is the contribution margin for each product 4. What Is the break-even point in units and dollars, assuming a ratio of two RC1s are sold for each RC2 5. What level of sales would provide a target income of $210,000 for Breeden for the year 8. What would be the manufacturing cost for each product, and profit for the company If they made and sold 8000 RC1 and 4000 RC2.Explanation / Answer
1. Annual Budget for the company
Notes: a. Manufacturing OH = 112,000*12
b. Selling and Administrative expenses = 40,000*12 = 480,000
c. Others are explained in the next section. Sales and all the costs per unit are all multipled by the number of units produced and sold monthly and annually
2. Monthly and Annual budget of each product and then total monthly and annual budget:
Breeden Company
Monthly and Annual Budget
RC1
RC2
Total
Monthly
Annual
Monthly
Annual
Monthly
Annual
Sales in Units
10,000
120,000
5,000
60,000
15,000
180,000
Sales
200,000
2,400,000
115,000
1,380,000
315,000
3,780,000
Manufacturing Cost:
Direct Materials
55,000
660,000
32,000
384,000
87,000
1,044,000
Direct Labor
35,000
420,000
21,000
252,000
56,000
672,000
Manufacturing overheads
70,000
840,000
42,000
504,000
112,000
1,344,000
Total Manufacturing Cost
160,000
1,920,000
95,000
1,140,000
255,000
3,060,000
Gross Profit
40,000
480,000
20,000
240,000
60,000
720,000
Selling and Adminstrative expenses
480,000
Net Profit
240,000
3. Contribution margin per unit:
Notes: Supplies cost per unit is calculated as follows:
4. Break even point in units and dollars:
Break even sales in dollars = Total Fixed expenses / Weighted Average Contribution Margin
Weighted Average Selling Price = (Sale price RC1*sale % RC1)+(sale price RC1*sale % RC2)
Weighted Avg Variable cost = (Variable price RC1*sale % RC1)+(Variable price RC2*sale % RC2)
Break even sales in units = (Break even Sales / Weighted Avg Selling price) = 32,79,338 / 21 = 156,159 units
5. Target Income = 210000
Add: Total annual fixed expenses = 1,572,000
Target Gross Profit = 1,782,000
Required sales = Target Gross Profit / Weighted Avg Contribution margin = 17,82,000 / 47.94% = . 3,717,417
Number of units = 3,717,417 / 21 = 117,020 units (Rounded up)
6.
Monthly and Annual Budget
RC1
RC2
Total
Monthly
Annual
Monthly
Annual
Monthly
Annual
Sales in Units
8,000
96,000
4,000
48,000
12,000
144,000
Sales
160,000
1,920,000
92,000
1,104,000
252,000
3,024,000
Manufacturing Cost:
Direct Materials
44,000
528,000
25,600
307,200
69,600
835,200
Direct Labor
28,000
336,000
16,800
201,600
44,800
537,600
Variable Overheads
11,200
134,400
5,600
67,200
16,800
201,600
Total Variable Costs
83,200
998,400
48,000
576,000
131,200
1,574,400
Contribution Margin
76,800
921,600
44,000
528,000
120,800
1,449,600
Fixed Expenses
Occupancy
15,000
180,000
Equipment Maintenance
17,000
204,000
Equipment Depreciation
8,000
96,000
QC
15,000
180,000
Manufacturing Admin
36,000
432,000
Total Fixed manufacuring expenses
1,092,000
Total Manufacturing Cost (Total variable + Fixed)
2,541,600
Selling and Administrative expenses
40000
480000
Net Profit
(122,400)
RC1 RC2 Selling Price Per unit 20 23 Direct Materials Per unit 5.5 6.4 Direct Labor per unit 3.5 4.2 Manufacturing OH Per unit(DL*2) 7 8.4 Manufacturing Cost Per unit 16 19Related Questions
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