Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here. The following names are to be used when completing this problem:Operating IncomeVariable CostsSalesFixed Costs per UnitSelling Price per UnitVariable Cost per UnitContribution MarginFixed CostsOperating LossIf Flanders purchases the new machinery, what will be the company’s break-even point in units? . Use commas as needed (i.e. 1,234).If Flanders purchases the new machinery, what will be the company’s break-even point in dollars? . Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).Assuming Flanders purchases the new machinery, construct a contribution margin income statement for sale of 216,000 units. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).Flanders ManufacturingContribution Margin Income StatementFor the Month Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345)Flanders ManufacturingContribution Margin Income StatementFor the Month CurrentUnits sold216,000$Sales price per unitVariable cost per unitContribution margin per unitFixed costsBreak-even (in units)Break-even (in dollars)2.151.752$0.40$ 56,000140,000$301,000SalesVariable costsContribution marginFixed costsNet income (loss)$464,400$378,000$ 86,400$ 56,000$ 30,400

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.

The following names are to be used when completing this problem:

Operating Income	Variable Costs	Sales
Fixed Costs per Unit	Selling Price per Unit	Variable Cost per Unit
Contribution Margin	Fixed Costs	Operating Loss

If Flanders purchases the new machinery, what will be the company’s break-even point in units? . Use commas as needed (i.e. 1,234).
If Flanders purchases the new machinery, what will be the company’s break-even point in dollars? . Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).
Assuming Flanders purchases the new machinery, construct a contribution margin income statement for sale of 216,000 units. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).

Flanders Manufacturing

Contribution Margin Income Statement

For the Month
Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345)

Flanders Manufacturing

Contribution Margin Income Statement

For the Month

Current
Units sold
216,000
$
Sales price per unit
Variable cost per unit
Contribution margin per unit
Fixed costs
Break-even (in units)
Break-even (in dollars)
2.15
1.75
2$
0.40
$ 56,000
140,000
$301,000
Sales
Variable costs
Contribution margin
Fixed costs
Net income (loss)
$464,400
$378,000
$ 86,400
$ 56,000
$ 30,400

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