Briefly explain the impact of each of the following scenarios on the contribution margin per unit and the break-even point: (i) Sales volume increases (ii) Total fixed cost decreases (iii) Selling price per unit increases (iv) Variable cost per unit increases
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The background information is provided in the image attached. Solve the following:
g) Briefly explain the impact of each of the following scenarios on the contribution margin per unit and the
break-even point:
(i) Sales volume increases
(ii) Total fixed cost decreases
(iii) Selling price per unit increases
(iv) Variable cost per unit increases
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- Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) Production Costs: 4,000 6,000 Direct Materials. $60,000 $90,000 Direct Labour 80,000 120,000 Overhead: Indirect Materials.. 25,000 37,500 Indirect Labour 40,000 50,000 Depreciation 20,000 20,000 Selling & Administrative Expenses: Sales Salaries . Office Salaries 50,000 65,000 30,000 30,000 Advertising 45,000 45,000 Other 15,000 20.000 Total $365.000 $477.500Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000 Production OCosts: Direct Materials $60,000 $90,000 Direct Labour 80,000 120,000 Overhead: Indirect Materials... 25,000 37,500 Indirect Labour 40,000 50,000 Depreciation 20,000 20,000 Selling & Administrative Expenses: Sales Salaries 50,000 65,000 Office Salaries 30,000 30,000 Advertising 45,000 45,000 Other 15,000 20,000 Total $365.000 $477,500 Required: a) Classify each cost element as either fixed, variable, or mixed b) Calculate: i) the variable production cost per unit and the total fixed production overhead. ii) The total variable cost per unit and the total fixed costs Hint: Use the high-low method to separate mixed costs into their fixed and…
- Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000 Production Costs: Direct Materials $60,000 $90,000 Direct Labour 80,000 120,000 Overhead: Indirect Materials 25,000 37,500 Indirect Labour 40,000 50,000 Depreciation 20,000 20,000 Selling & Administrative Expenses: Sales Salaries 50,000…Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000 Production Costs: Direct Materials $60,000 $90,000 Direct Labour 80,000 120,000 Overhead: Indirect Materials 25,000 37,500 Indirect Labour 40,000 50,000 Depreciation 20,000 20,000 Selling & Administrative Expenses: Sales Salaries 50,000 65,000 Office Salaries 30,000 30,000 Advertising 45,000 45,000 Other 15,000 20,000 Total $365,000 $477,500 Required: a) Classify each cost element as either fixed, variable, or mixed b) Calculate: i) the variable production cost per unit and the total fixed production overhead. ii) The total variable cost per unit and the total fixed costs Hint: Use the high-low method to separate mixed costs into their fixed and variable…Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000 Production Costs: Direct Materials $60,000 $90,000 Direct Labour 80,000 120,000 Overhead: Indirect Materials 25,000 37,500 Indirect Labour ............. 40,000 50,000 Depreciation . 20,000 20,000 Selling & Administrative Expenses: Sales Salaries 50,000 65,000 Office Salaries ....... 30,000 30,000 .. . Advertising 45,000 45,000 Other 15,000 20,000 Total $365,000 $477.500 Required: d) Assuming sales of 5,000 units, calculate Buggs-Off break-even point and margin of safetv in units and sales dollars. e) Recompute the break-even point in units, assuming that variable costs increased by 20% and fixed costs are reduced by $50,625. How will this impact the…
- Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000Production Costs:Direct Materials …………$60,000 $90,000Direct Labour …................. $80,000 $120,000Overhead:Indirect Materials…………... $25,000 $ 37,500Indirect Labour ……………. $40,000 $50,000Depreciation ………………. $20,000 $20,000Selling & Administrative Expenses:Sales Salaries ……………………$50,000 $65,000Office Salaries …………………$30,000 $30,000Advertising …………………… $ 45,000 $45,000Other ………………………………$415,000 $20,000Total…Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit 6,000 Production (# af boxes) Production Costs: 4,000 Direct Materials $60,000 $90,000 Direct Labour 80,000 120,000 Overhead: Indirect Materials.. 25,000 37,500 Indirect Labour 40,000 50,000 Depreciation 20,000 20,000 Selling & Administrative Expenses: Sales Salaries 50,000 65,000 Office Salaries 30,000 30,000 Advertising 45,000 45,000 Other 15.000 20,000 Total $365.000 S477.500 Required: a) Classify each cost element as either fixed, variable, or mixed b) Calculate: ) the variable production cost per unit and the total fixed production overhead. ii) The total variable cost per unit and the total fixed costs Hint: Use the high-low method to separate mixed costs into their fixed and variable…Need assistance with all workings please. Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020. Lower Limit Upper LimitProduction (# of boxes) 4,000 6,000Production Costs:Direct Materials ........................ $60,000 $90,000Direct Labour ............................ 80,000 120,000Overhead:Indirect Materials............... 25,000 37,500Indirect Labour ................ 40,000 50,000Depreciation ................... 20,000 20,000 Selling &…
- Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 128,000 to 200,000 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Components produced 128,000 160,000 200,000 Total costs: Total variable costs . . . . . . . . . $57,600 (d) (j) Total fixed costs . . . . . . . . . . . . 64,000 (e) (k) Total costs . . . . . . . . . . . . . . . . . $121,600 (f) (l) Cost per unit: Variable cost per unit . . . . . . . (a) (g) (m) Fixed cost per unit . . . . . . . . . . (b) (h) (n) Total cost per unit . . . . . . . . . . (c) (i) (o) Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar. Cost Report Components produced 128,000 160,000 200,000 Total costs: Total variable costs $57,600 (d) $fill in the blank 1 (j) $fill in the…Han Products manufactures 40,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per uni for part S-6 is: Direct materials Direct labor Variable manufacturing overhead $ 3.30 12.00 2.70 Fixed manufacturing overhead Total cost per part 6.00 $ 24.00 An outside supplier has offered to sell 40,000 units of part S-6 each year to Han Products for $22 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $90,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer? Answer is complete but not entirely correct. Financial advantage $ 8,000 ×Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 114,000 to 182,400 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Components produced 114,000 144,000 182,400 Total costs: Total variable costs . . . . . . . . . $49,020 (d) (j) Total fixed costs . . . . . . . . . . . . 54,720 (e) (k) Total costs . . . . . . . . . . . . . . . . . $103,740 (f) (l) Cost per unit: Variable cost per unit . . . . . . . (a) (g) (m) Fixed cost per unit . . . . . . . . . . (b) (h) (n) Total cost per unit . . . . . . . . . . (c) (i) (o) Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar. Cost Report Components produced 114,000 144,000 182,400 Total costs: Total variable costs $49,020 (d) $fill in the blank 1 (j) $fill in the…