Jordan and Taylor are beginning to understand break-evenanalysis.Selling price to Yumminess at $10 per...Jordan...

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Accounting

Jordan and Taylor are beginning to understand break-evenanalysis.
Selling price to Yumminess at $10 per tin. The cost is $8 pertin, which includes $6 of direct material and $1.50 of directlabor. Annual manufacturing overhead is estimated at $100,000 forthe expected sales of 200,000 tins. Operating expenses areprojected to be $80,000 annually.
After looking over the costs for manufacturing overhead andoperating expenses, you approximate that 85% of manufacturingoverhead and 20% of operating expenses are variable costs.
They are now discussing options with adjustments to costs andsales. As long as they keep bringing brownies, you keep turning outnumbers.
1. Jordan and Taylor are considering an advertisingcampaign for $40,000 annually. They expect this to increase salesby 5%. What would be the new net income? (5 points)
2. Yumminess wants to feature Chocolate Attack Browniesas a monthly special. The predicted sales volume is 50,000 tins.Yumminess wants Jordan and Taylor to cut their selling pricing by10%, citing that the volume will more than make up the difference.What will be the break-even point in tins during this sale? (5points)
3. Yumminess wants to feature Chocolate Attack Browniesas a monthly special. The predicted sales volume is 50,000 tins.Yumminess wants Jordan and Taylor to cut their selling pricing by10%, citing that the volume will more than make up the difference.What net income can Jordan and Taylor expect during this offer? (5points)
Can you not put the anwsers into a statementsheet.

Answer & Explanation Solved by verified expert

4.2 Ratings (854 Votes)

1	Net income
		$	$
	Selling price per unit		$10 per tin
	Direct Material (given)	$6
	Direct labor (given)	$1.50

	Manufacturing overhead:
	[Annual MOH * 85%]/number of tins expected
	[100,000*85%]/200000	$0.425

	Operating expense:
	[Annual operating expense*20%]/number of tins expected
	[80000*0.2]/200000	$0.008

	Total variable cost		$8.005 per tin
	contribution		$1.995

	Number of units sold when sale is increase to 5%
	[200000*(100+5%)]	210000
	Total contribution Margin *(2100001.995)**		418950
	Fixed costs:
	Manufacturing overhead	15000
	Operating expense [80000*80%]	64000
	Advertising	40000	119000
	Net income		299950


2	Break even point:
	Fixed costs:
	Manufacturing overhead[100000*15%]	15000
	Operating expense *[8000080%]**	64000
		79000

	If selling price cut down by 10% then variable contirbution will be
	($10-10%)-$8.005	$0.995

	Break even point
	[sales/ Contribution per unit]	79397 tins

3	Selling price per unit (10-10%)	9
	Variable cost (calculated in (1) above	8.005
	Contribution Margin per unit	0.995

	Number of units sold (200000+50000 tins)	250000 tins
	Contribution margin *(2500000.995)**	248750
	Fixed cost	79000
	Profit	169750

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Transcribed Image Text

In: AccountingJordan and Taylor are beginning to understand break-evenanalysis.Selling price to Yumminess at $10 per...Jordan and Taylor are beginning to understand break-evenanalysis.Selling price to Yumminess at $10 per tin. The cost is $8 pertin, which includes $6 of direct material and $1.50 of directlabor. Annual manufacturing overhead is estimated at $100,000 forthe expected sales of 200,000 tins. Operating expenses areprojected to be $80,000 annually.After looking over the costs for manufacturing overhead andoperating expenses, you approximate that 85% of manufacturingoverhead and 20% of operating expenses are variable costs.They are now discussing options with adjustments to costs andsales. As long as they keep bringing brownies, you keep turning outnumbers.1. Jordan and Taylor are considering an advertisingcampaign for $40,000 annually. They expect this to increase salesby 5%. What would be the new net income? (5 points)2. Yumminess wants to feature Chocolate Attack Browniesas a monthly special. The predicted sales volume is 50,000 tins.Yumminess wants Jordan and Taylor to cut their selling pricing by10%, citing that the volume will more than make up the difference.What will be the break-even point in tins during this sale? (5points)3. Yumminess wants to feature Chocolate Attack Browniesas a monthly special. The predicted sales volume is 50,000 tins.Yumminess wants Jordan and Taylor to cut their selling pricing by10%, citing that the volume will more than make up the difference.What net income can Jordan and Taylor expect during this offer? (5points)Can you not put the anwsers into a statementsheet.