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Huber Corporation has collected the following information after its first year of sales. Sales were...

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Question

Accounting

Huber Corporation has collected the following information after its first year of sales. Sales were $1,000,000 on 40,000 units; selling expenses $200,000 (30% variable and 70% fixed); direct materials $327,000; direct labor $190,000; administrative expenses $250,000 (30% variable and 70% fixed); manufacturing overhead $240,000 (20% variable and 80% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 20% next year.

Instructions

(a) Compute (1) the contribution margin for the current year and the projected year, and (2) the fixed costs for the current year. (Assume that fixed costs will remain the same in the projected year.)

(b) Compute the break-even point in units and sales dollars for the current year.

(a) (1)

Current

Year

Projected

Year

Sales

1,500,000

1,650,000

Variable Costs:

Total Variable Costs

Contribution Margin

(a) (2)

Current

Year

Projected

Year

Fixed Costs:

Total Fixed Costs

(b) Unit Selling Price

Unit Variable Cost

Unit Contribution Margin

Contribution Margin Ratio

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