Can someone help me? Boards Inc. fabricates skateboards that the company sells for $...
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Accounting
Can someone help me?
Boards Inc. fabricates skateboards that the company sells for $ 37.50 each. Fixed costs for the last 12 months equaled $4,800. For the same period variable cost per unit equaled $22.50. The skateboards are manufactured in an old factory that relies heavily on worker labor. The company is considering the construction of a new automated plant that would increase fixed costs by $ 4,320 per month but decrease the variable cost per board by $8.50.
1. What would the fixed costs and unit variable costs be under the proposal. Use the unit variable cost and sales price to calculate the unit contribution margin:
Fixed Cost
Variable cost per unit
Contribution Margin per unit (sales price VC)
2. Compute the breakeven under the new proposal.
3. Prepare comparative Contribution Margin Income Statements for the current and proposed manufacturing processes assuming the sales volume is 480 units per month.
Current Process
Proposed new process
Sales Revenue
Variable Costs
Contribution Margin
Fixed Costs
Net Income
4. If the company is expected to sell 480 units a month, should they build the new factory?
Yes No (circle one) Why?
Answer & Explanation
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