Wilton Company is analyzing two alternative methods of producing its product. The production manager indicates...
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Accounting
Wilton Company is analyzing two alternative methods of producing its product. The production manager indicates that variable costs can be reduced 40% by installing a machine that automates production, but fixed costs would increase. Alternative 1 shows costs before installing the machine; Alternative 2 shows costs after the machines Alternative Alternative Variable costs per unit Fixed costs Selling price per unit Income tax rate $ 20 200,000 $ 40 $274,400 40 25% 25% REQUIRED: (a) Compute the break-even point in units and dollars for both alternatives. Enter your answers in the designated spaces below. You may show your calculations (recommended) in the space to the right. (b) Prepare a forecasted income statement in the contribution margin format for both alternatives assuming that 30,000 units will be sold. Use the income statement templates below for your answers
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