Required information [The following information applies to the questions displayed below.] Burchard Company sold 29,000 units of its only product for $19.20 per unit this year. Manufacturing and selling the product required $288,000 of fixed costs. Its per unit variable costs follow. Direct materials Direct labor Variable overhead costs Variable selling and administrative costs $ 3.40 2.40 0.34 0.14 For the next year, management will use a new material, which will reduce direct materials costs to $1.02 per unit and reduce direct labor costs to $1.68 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change. Management is also considering raising its selling price to $24.96 per unit, which would decrease unit sales volume to 24,650 units. Required: 1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the selling price. (Round your answers to 2 decimal places.) Sales price per unit Variable costs per unit Direct materials Direct labor Variable overhead Variable selling & administrative expenses Variable costs per unit Contribution margin per unit With new material With new material and price increase
Required information [The following information applies to the questions displayed below.] Burchard Company sold 29,000 units of its only product for $19.20 per unit this year. Manufacturing and selling the product required $288,000 of fixed costs. Its per unit variable costs follow. Direct materials Direct labor Variable overhead costs Variable selling and administrative costs $ 3.40 2.40 0.34 0.14 For the next year, management will use a new material, which will reduce direct materials costs to $1.02 per unit and reduce direct labor costs to $1.68 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change. Management is also considering raising its selling price to $24.96 per unit, which would decrease unit sales volume to 24,650 units. Required: 1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the selling price. (Round your answers to 2 decimal places.) Sales price per unit Variable costs per unit Direct materials Direct labor Variable overhead Variable selling & administrative expenses Variable costs per unit Contribution margin per unit With new material With new material and price increase
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Required information
[The following information applies to the questions displayed below.]
Burchard Company sold 29,000 units of its only product for $19.20 per unit this year. Manufacturing
and selling the product required $288,000 of fixed costs. Its per unit variable costs follow.
Direct materials
Direct labor
Variable overhead costs
Variable selling and administrative costs
$ 3.40
2.40
0.34
0.14
For the next year, management will use a new material, which will reduce direct materials costs to $1.02
per unit and reduce direct labor costs to $1.68 per unit. Sales, total fixed costs, variable overhead costs
per unit, and variable selling and administrative costs per unit will not change. Management is also
considering raising its selling price to $24.96 per unit, which would decrease unit sales volume to
24,650 units.
Required:
1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing
the selling price. (Round your answers to 2 decimal places.)
Sales price per unit
Variable costs per unit
Direct materials
Direct labor
Variable overhead
Variable selling & administrative expenses
Variable costs per unit
Contribution margin per unit
With new material
With new material
and price
increase](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9eecc5f2-2cf9-428a-b7a8-3316ca8b0d9e%2F2e1fa326-db14-48ae-8dab-4630277d2e22%2Fjaks0ac_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Burchard Company sold 29,000 units of its only product for $19.20 per unit this year. Manufacturing
and selling the product required $288,000 of fixed costs. Its per unit variable costs follow.
Direct materials
Direct labor
Variable overhead costs
Variable selling and administrative costs
$ 3.40
2.40
0.34
0.14
For the next year, management will use a new material, which will reduce direct materials costs to $1.02
per unit and reduce direct labor costs to $1.68 per unit. Sales, total fixed costs, variable overhead costs
per unit, and variable selling and administrative costs per unit will not change. Management is also
considering raising its selling price to $24.96 per unit, which would decrease unit sales volume to
24,650 units.
Required:
1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing
the selling price. (Round your answers to 2 decimal places.)
Sales price per unit
Variable costs per unit
Direct materials
Direct labor
Variable overhead
Variable selling & administrative expenses
Variable costs per unit
Contribution margin per unit
With new material
With new material
and price
increase
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