Newton Company manufactures and sells one product. The company assembled the following projections for its first year ofoperations:Variable costs per unit:Manufacturing:Direct materials$$20Direct labor16Variable manufacturing overheadVariable selling and administrativeFixed costs per year:42$2Fixed manufacturing overheadFixed selling and administrative$450,000$ 70,000expensesDuring its first year of operations Newton expects to produce 25,000 units and sell 20,000 units. The budgeted selling price of thecompany's only product is $66 per unit. 4. Assuming that Newton's projections are accurate, what will be its variable costing net operating income (loss) in its first year ofoperations?5. Newton is considering investing in a higher quality raw material that will increase its direct materials cost by $1 per unit. It estimatesthat the higher quality raw material will increase sales by 1,000 units. What will be the company's revised variable costing net operatingincome (loss) if it invests in the higher quality raw material and continues to produce 25,000 units?6. Newton is considering raising its selling price by $1.00 per unit with an expectation that it will lower unit sales by 1,500 units. Whatwill be the company's revised variable costing net operating income (loss) if it raises its price by $1.00 and continues to produce25,000 units?7. What is Newton's break-even point in unit sales? What is its break-even point in dollar sales?8. What is the company's projected margin of safety in its first year of operations?

SOLUTION- 4- MANUFACTURING COST PER UNIT UNDER VARIABLE COSTING…

Newton Company manufactures and sells one product. The company assembled the following projections for its first year of pperations: Variable costs per unit: Manufacturing: Direct materials $ 20 Direct labor $ 16 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 4 $ 2 $450,000 $ 70,000 expenses During its first year of operations Newton expects to produce 25,000 units and sell 20,000 units. The budgeted selling price of the company's only product is $66 per unit.

Newton Company manufactures and sells one product. The company assembled the following projections for its first year of pperations: Variable costs per unit: Manufacturing: Direct materials $ 20 Direct labor $ 16 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 4 $ 2 $450,000 $ 70,000 expenses During its first year of operations Newton expects to produce 25,000 units and sell 20,000 units. The budgeted selling price of the company's only product is $66 per unit.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 4CMA: Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold...

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