Drake Company produces a single product. Last year's income statement is as follows: Sales (21,000 units) $1,278,900 Less: Variable costs 879,900 Contribution margin $399,000 Less: Fixed costs 259,800 Operating income $139,200 Required: Question Content Area Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $234,100 per year, but will lower variable costs to 42 percent of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming Drake makes this investment. Round all amounts to the nearest dollar. Drake CompanyBudgeted Income Statement $Sales Less: Variable costs $Contribution margin Less: Fixed costs $Net income Question Content Area What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.
Drake Company produces a single product. Last year's income statement is as follows: Sales (21,000 units) $1,278,900 Less: Variable costs 879,900 Contribution margin $399,000 Less: Fixed costs 259,800 Operating income $139,200 Required: Question Content Area Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $234,100 per year, but will lower variable costs to 42 percent of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming Drake makes this investment. Round all amounts to the nearest dollar. Drake CompanyBudgeted Income Statement $Sales Less: Variable costs $Contribution margin Less: Fixed costs $Net income Question Content Area What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 40P
Related questions
Question
Drake Company produces a single product. Last year's income statement is as follows:
| Sales (21,000 units) | $1,278,900 |
| Less: Variable costs | 879,900 |
| Contribution margin | $399,000 |
| Less: Fixed costs | 259,800 |
| Operating income | $139,200 |
Required:
Question Content Area
Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $234,100 per year, but will lower variable costs to 42 percent of sales. Units sold will remain unchanged. Prepare a
|
|
$Sales |
|
|
Less: Variable costs |
|
|
$Contribution margin |
|
|
Less: Fixed costs |
|
|
$Net income |
Question Content Area
What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.
units
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT