Wisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would occur under level production, and aftertax costs would decline by $31,500, but inventory would increase by $350,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 10.0 percent. a-1. Determine the extra cost or savings of switching over to level production. Loss or Gain and how much? __________ a-2. Should the company go ahead and switch to level production? multiple choice Yes No b. How low would interest rates need to fall before level production would be feasible?

Wisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would occur under level production, and aftertax costs would decline by $31,500, but inventory would increase by $350,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 10.0 percent. a-1. Determine the extra cost or savings of switching over to level production. Loss or Gain and how much? __________ a-2. Should the company go ahead and switch to level production? multiple choice Yes No b. How low would interest rates need to fall before level production would be feasible?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 7EA: Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per...

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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.
Wisconsin Snowmobile Corporation is considering a switch to level production. Cost efficiencies would occur under level production, and aftertax costs would decline by $30,000, but inventory would increase by $250,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 13.5 percent. a-1. Determine the extra cost or savings of switching over to level production. a- 2. Should the company go ahead and switch to level production? multiple choice Yes No b. How low would interest rates need to fall before level production would be feasible? Note: Input your answer as a percent rounded to the nearest whole number.
XYZ company is studying the profitability of a change in operation and has gathered the following information. Anticipated Operation: Fixed Costs: $38,000, Selling Price: $16 Variable Cost $10 and Sales (Unit 9,000. Current Operation: Fixed Costs: $48,000, Selling Price: $22 Variable Cost: $12. and Sales (Units): 6.000. Should XYZ company make the change? Select one: O a. No. because sales will drop by 3.000 units. Ob. Yes, the company will be better off by $4,000. OC.No bacause the company will be worse off by 522.000. Odtis impossible to judge because additional information is needed. Oe No because the company will be worse off by $4. 000. Tfredrosts of 5300 000. he company s considering increasing the price of its units to S65 per unit, If the price
how can the changes below affect Mirabel’s overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only the company’s break-even point, but also the desired margin of safety. If Mirabel purchases the new equipment for $1,200,000, it will increase fixed costs by 10% but will decrease the variable cost per unit for all 3 models by 5%. If Mirabel invests the additional $650,000 in fixed marketing expenses, sales of the Model 301 are expected to increase by 8%. If the projection is that sales will increase by 10% in the coming year. The sales volume remains fixed but there is a 5% increase in variable expenses (materials cost) for the Model 101 and 301, and a 10% increase in variable expenses for Model 201.
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.…
The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): Decision State of Nature Alternative Low Demand (S1) Medium Demand (S2) High Demand )S3) Manufacture, d(1) -20 40 100 Purchase, d(2) 10 45 70 The state-of-nature probabilities are P s1= 0.35, P s2= 0.35, and P s3= 0.30 Use expected value to recommend a decision.
Groove auto is considering the introduction of a new model of wireless speakers with the following price and cost characteristics.sales price 443.00 per unit.variable cost 203.00 per unit.fixed costs 715,000assume that the projected number of units sold for the year is 4 400.consider requirement b,c,d independent from each other. [a] What will the operating profit be? [b] What is the impact of operating profit if the sales price decreases by twenty percent increases by ten percent? [c] What is the impact on operating profit A veritable cost per unit decrease by ten percent increase by twenty? [d] Suppose that fixed costs for the year are 20% lower. Than projected and bearable costs per unit are 10% higher than projected. What impact will these costs changes have on operating profit for the year Kindly solve b c and d
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 Revised Fixed costs = 56000 + 18250 = $74250 Variable cost per unit = 1.75 - 0.15 = $1.6 per unit Contribution margin per unit = Sales price per unit - Variable cost per unit = 2.15 - 1.6 = $0.55 per unit Breakeven point in units = Fixed costs/ Breakeven point in units = 74250/0.55 = 135000 units Breakeven sales revenue = 135000*2.15 = $290,250 1. Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown…
Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 439.00 per unit Variable costs 199.00 per unit Fixed costs 687,000 per year Assume that the projected number of units sold for the year is 4,200. Consider requirements (b), (c), and (d) independently of each other. Required: What will the operating profit be? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? Suppose that fixed costs for the year are 20 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?
Your Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: Annual sales in units 3,000 Selling price per unit $309 Variable costs per unit: Production $130 Selling $50 Traceable annual fixed costs: Production $51,000 Selling $75,000 Allocated annual fixed cost $54,000 If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the existing product lines is expected to drop $78,000 per year. What is the increase in net income if the new product is added next year? This is a reverse drop the segment. New CM is positive and new FC and lost CM are negative.
XYZ company is studying the profitability of a change in operation and has gathered the following information. Anticipated Operation: Fixed Costs: $38,000, Selling Price: $16, Variable Cost $10, and Sales (Units): 9,000. Current Operation: Fixed Costs: $48,000, Selling Price: $22, Variable Cost: $12, and Sales (Units): 6.000. Should XYZ company make the change? Select one Oa.No. because sales will drop by 3.000 units. Ob.Yes, the company will be better off by 54,000. 2E No. because the company will be worse off by $22,000. Od itis impossible to judge because additional information is needed. Oe.No. because the company will be worse off by 54.000.
An industry is going to launch a new product in the market in the year 2018. The data pertaining to the costs and the estimated sales is provided as follows 1. Fixed cost for the year 2018-2019 is 20000$. 2. The variable cost per unit is 12$. 3. The estimated sales are 800000$. 4. If each unit is sold at 30$. Find out 1. Break-even point. 2. The profit at a turn-over of 25000 units. 3. Margin of safety in terms of units and sales. 4. If a profit target is 1200000$, compute the turn over required. 5. Also construct the break-even chart and show the details on it.