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Boleyn Company, operating at full capacity, sold 120,000 units at a price of $140 per unit during 2014. Its income statement for 2014 is as follows: Sales $16,800,000 Cost of goods sold 6,200,000 Gross profit. $10,600,000 Expenses: Selling expenses.. $3,400,000 Administrative expenses. 1,550,000 Total expenses 4,950,000 Income from operations... $ 5,650,000 ...... The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold Selling expenses Administrative expenses 60% 40% 75% 25% 60% 40% Management is considering a plant expansion program that will permit an increase of $2,800,000 in yearly sales. The expansion will increase fixed costs by $1,250,000, but will not affect the relationship between sales and variable costs. Instructions 1. Determine the total fixed costs and the total variable costs for 2014. 2. Determine for 2014 (a) the unit variable cost and (b) the unit contribution margin. 3. Compute the break-even sales (units) for 2014. 4. Compute the break-even sales (units) under the proposed program. 5. Determine the amount of sales (units) that would be necessary under the proposed

Boleyn Company, operating at full capacity, sold 120,000 units at a price of $140 per unit during 2014. Its income statement for 2014 is as follows: Sales $16,800,000 Cost of goods sold 6,200,000 Gross profit. $10,600,000 Expenses: Selling expenses.. $3,400,000 Administrative expenses. 1,550,000 Total expenses 4,950,000 Income from operations... $ 5,650,000 ...... The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold Selling expenses Administrative expenses 60% 40% 75% 25% 60% 40% Management is considering a plant expansion program that will permit an increase of $2,800,000 in yearly sales. The expansion will increase fixed costs by $1,250,000, but will not affect the relationship between sales and variable costs. Instructions 1. Determine the total fixed costs and the total variable costs for 2014. 2. Determine for 2014 (a) the unit variable cost and (b) the unit contribution margin. 3. Compute the break-even sales (units) for 2014. 4. Compute the break-even sales (units) under the proposed program. 5. Determine the amount of sales (units) that would be necessary under the proposed

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 24E: Last year, Orsen Company produced 25,000 juicers and sold 26,500 juicers for 60 each. The actual...
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Boleyn Company, operating at full capacity, sold 120,000 units at a price of $140 per unit during 2014. Its income statement for 2014 is as follows: Sales $16,800,000 Cost of goods sold 6,200,000 Gross profit. $10,600,000 Expenses: Selling expenses.. $3,400,000 Administrative expenses. 1,550,000 Total expenses 4,950,000 Income from operations... $ 5,650,000 ...... The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold Selling expenses Administrative expenses 60% 40% 75% 25% 60% 40% Management is considering a plant expansion program that will permit an increase of $2,800,000 in yearly sales. The expansion will increase fixed costs by $1,250,000, but will not affect the relationship between sales and variable costs. Instructions 1. Determine the total fixed costs and the total variable costs for 2014. 2. Determine for 2014 (a) the unit variable cost and (b) the unit contribution margin. 3. Compute the break-even sales (units) for 2014. 4. Compute the break-even sales (units) under the proposed program. 5. Determine the amount of sales (units) that would be necessary under the proposed
Transcribed Image Text:Boleyn Company, operating at full capacity, sold 120,000 units at a price of $140 per unit during 2014. Its income statement for 2014 is as follows: Sales $16,800,000 Cost of goods sold 6,200,000 Gross profit. $10,600,000 Expenses: Selling expenses.. $3,400,000 Administrative expenses. 1,550,000 Total expenses 4,950,000 Income from operations... $ 5,650,000 ...... The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold Selling expenses Administrative expenses 60% 40% 75% 25% 60% 40% Management is considering a plant expansion program that will permit an increase of $2,800,000 in yearly sales. The expansion will increase fixed costs by $1,250,000, but will not affect the relationship between sales and variable costs. Instructions 1. Determine the total fixed costs and the total variable costs for 2014. 2. Determine for 2014 (a) the unit variable cost and (b) the unit contribution margin. 3. Compute the break-even sales (units) for 2014. 4. Compute the break-even sales (units) under the proposed program. 5. Determine the amount of sales (units) that would be necessary under the proposed
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