We have been asked to analyze our denim jeans line by labor cost (from $13.00 to $16.00 by $0.25) and electricity costs (from 0.85 to 1.50 by 0.05). Fixed Cost = $184,000 Material cost per pair = $9.17 Revenue per pair = $29.99 Quantity = 27,500 If we are to be profitable, what must the electricity cost be if our labor cost is $13.25 per hour?

We have been asked to analyze our denim jeans line by labor cost (from $13.00 to $16.00 by $0.25) and electricity costs (from 0.85 to 1.50 by 0.05). Fixed Cost = $184,000 Material cost per pair = $9.17 Revenue per pair = $29.99 Quantity = 27,500 If we are to be profitable, what must the electricity cost be if our labor cost is $13.25 per hour?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

See similar textbooks

Similar questions

Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
Marshall s target margin of safety be in units and dollars if they required a $14,000 margin of safety?
A jeans maker is designing a new line of jeans. These jeans will sell for $410 per unit and cost $328 per unit in variable costs to make. Fixed cost total $120,000. What would the contribution margin ratio be?
A jeans maker is designing a new line of jeans. These jeans will sell for $410 per unit and cost $328 per unit in variable costs to make. Fixed costs total $120,000. If 5,000 units are produced and sold, what does the income equal?
Swifty Corporation has gathered the following information concerning one model of shoe: Variable manufacturing costs $40000 Variable selling and administrative costs $15000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1700000 ROI 30% Planned production and sales 5000 pairs What is the target selling price per pair of shoes? $113 $169 $142 $158
Swifty Corporation has gathered the following information concerning one model of shoe: Variable manufacturing costs $35000 Variable selling and administrative costs $20000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1700000 ROI 30% Planned production and sales 5000 pairs What is the total cost per pair of shoes? $95 $168 $67 $39
Waterway Industries has gathered the following information concerning one model of shoe: Variable manufacturing costs $35000 Variable selling and administrative costs $15000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1700000 ROI 30% Planned production and sales 6000 pairs What is the target selling price per pair of shoes? $140 $118 $132 $93
Limos Mfg. has been manufacturing furniture sets and is considering whether tomake or outsource its own seat cushions needed for its chairs. The expected priceof the cushions is P50 per unit.If it continue to produce the company would incur the following unit cost: Directmaterials P13, Direct Labor P15, Variable overhead 5, Fixed overhead (based onthe average production requirement of 10,000 units) P20 for a total of P53.Let us assume that materials and labor costs are expected to increase by 20% nextperiod. Factory overhead costs will remain the same, except that 40% of the fixedoverhead will be eliminated in case the company decides to buy the seat cushionsfrom other suppliers. Moreover, the facilities presently being used in the manufactureof seat cushions can be utilized to manufacture another part of the main product incase such facilities become vacant when the company decides to stop producing theseat cushions. The alternative use of resources would result into cost savings…
Bramble Corp. has gathered the following information concerning one model of shoe: Variable manufacturing costs $40000 Variable selling and administrative costs $20000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1500000 ROI 30% Planned production and sales 5000 pairs What is the total cost per pair of shoes? $96 $148 $68 $40
Oriole Company has gathered the following information concerning one model of shoe: Variable manufacturing costs $45000 Variable selling and administrative costs $23000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1700000 ROI 30% Planned production and sales 6000 pairs What is the desired ROI per pair of shoes? $58 $140 $85 $143
A Production Company can produce a product for $80 per unit. The investment per unit in equipment is $40, in labor is $25, in raw material is $10, and in fixed overhead is $5. Delta can purchase the product from Belton Industrial for $76. When Delta buys the product, they still have a $20 cost of equipment. At what demand level should Delta outsource the production of the product and buy it? Should they outsource the production at all? (Show your analysis by working out the problem.)
Assume that a manufacturer can purchase a needed component from a supplier at a cost of $9.50 per unit, or it can invest $60,000 in equipment and produce the item at a cost of $7.00 per unit. (a) Determine the quantity for which total costs are equal for the make and buy alternatives. (b) What is the minimum cost alternative if 15,000 units are required? What is the minimum cost? (c) If the number of units required of the component is close to trhe break even quantity, what factors might might influence the final decision to make or buy