management accounting chapter 6 p646a lo 1 2 3 4 poole corporation has collected the following i

Hello, the estimated income statement will be like, first it will be sales which will be 2880000

given to us total variable cost for current year which is 9 crore 90 lakh dollars. Then evaluati

So first is to compute a company and ratio and it's a given point in all the sales computer issu

So in this question we use a Xo the minimum price is 2 .22 per case relevant cost is the variabl

So we're given that a small camp stove sales for $590 per unit. So price of $590. And then has v

Question

P6.46A (Lo 1, 2, 3, 4) Poole Corporation has collected the following information after its first year. Calculate the contribution of sales. Net sales were $1.6 million on 100,000 units. Selling expenses were $240,000 (40% variable, 60% fixed). Direct materials were $511,000, direct labor was $285,000, administrative expenses were $280,000 (20% variable, 80% fixed), and manufacturing overhead was $360,000 (70% variable, 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the changes in the business coming year. Management has projected that unit sales will increase by 10% next year. Assume no change in the price of the units. Instructions: a. Calculate (1) the contribution margin for the current year and the projected year, and (2) the CM ratio for the current year. (Assume that fixed costs will remain the same in the projected year.) b. Calculate the break-even point in units and sales dollars for the first year. c. The company has a target operating income of $310,000. Calculate the required sales amount in dollars for the company to meet its target. d. Assuming the company meets its target operating income number, calculate by what percentage its sales could fall before the company operates at a loss. That is, what is its margin of safety ratio? e. The company is considering a purchase of equipment that would reduce its direct labor costs by $104,000 and would change its manufacturing overhead costs to 30% variable and 70% fixed. (Assume the total manufacturing overhead cost is $360,000, as above.) It is also considering switching to a pure commission basis for its sales staff. This would change selling expenses to 90% variable and 10% fixed. (Assume the total selling expenses are $240,000, as above. Assume no change in the volume or price of the units.) Calculate (1) the contribution margin and (2) the contribution margin ratio, and (3) recalculate the break-even point in sales dollars. Comment on the effect each of management's proposed changes has on the break-even point. Determine the contribution margin. 4P6.47A (Lo 1) Kosinski Manufacturing carries no inventories. Its product is manufactured only when

P6.46A (Lo 1, 2, 3, 4) Poole Corporation has collected the following information after its first year. Calculate the contribution of sales. Net sales were $1.6 million on 100,000 units. Selling expenses were $240,000 (40% variable, 60% fixed). Direct materials were $511,000, direct labor was $285,000, administrative expenses were $280,000 (20% variable, 80% fixed), and manufacturing overhead was $360,000 (70% variable, 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the changes in the business coming year. Management has projected that unit sales will increase by 10% next year. Assume no change in the price of the units.

Instructions:
a. Calculate (1) the contribution margin for the current year and the projected year, and (2) the CM ratio for the current year. (Assume that fixed costs will remain the same in the projected year.)
b. Calculate the break-even point in units and sales dollars for the first year.
c. The company has a target operating income of $310,000. Calculate the required sales amount in dollars for the company to meet its target.
d. Assuming the company meets its target operating income number, calculate by what percentage its sales could fall before the company operates at a loss. That is, what is its margin of safety ratio?
e. The company is considering a purchase of equipment that would reduce its direct labor costs by $104,000 and would change its manufacturing overhead costs to 30% variable and 70% fixed. (Assume the total manufacturing overhead cost is $360,000, as above.) It is also considering switching to a pure commission basis for its sales staff. This would change selling expenses to 90% variable and 10% fixed. (Assume the total selling expenses are $240,000, as above. Assume no change in the volume or price of the units.) Calculate (1) the contribution margin and (2) the contribution margin ratio, and (3) recalculate the break-even point in sales dollars. Comment on the effect each of management's proposed changes has on the break-even point.

Determine the contribution margin.

4P6.47A (Lo 1) Kosinski Manufacturing carries no inventories. Its product is manufactured only when