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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.  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 = $290,250 1. Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345) Flanders Manufacturing Contribution Margin Income Statement For the Month

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 = $290,250 1. Complete the following contribution margin income statement to properly reflect the break-even information given in the problem. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345) Flanders Manufacturing Contribution Margin Income Statement For the Month

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 1MC: The amount of a units sales price that helps to cover fixed expenses is its ____________________. A....
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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. 

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 with "$" and commas as needed (i.e. $12,345)

Flanders Manufacturing
Contribution Margin Income Statement
For the Month
   
   
   
   
   
Current Units sold 216,000 $ Sales price per unit Variable cost per unit Contribution margin per unit Fixed costs Break-even (in units) Break-even (in dollars) 2.15 1.75 2$ 0.40 $ 56,000 140,000 $301,000 Sales Variable costs Contribution margin Fixed costs Net income (loss) $464,400 $378,000 $ 86,400 $ 56,000 $ 30,400
Transcribed Image Text:Current Units sold 216,000 $ Sales price per unit Variable cost per unit Contribution margin per unit Fixed costs Break-even (in units) Break-even (in dollars) 2.15 1.75 2$ 0.40 $ 56,000 140,000 $301,000 Sales Variable costs Contribution margin Fixed costs Net income (loss) $464,400 $378,000 $ 86,400 $ 56,000 $ 30,400
Contribution Margin Income Statement Sales (216000*2.15) Less: Variable Costs (216000*1.6) Contribution Margin Less: Fixed costs Operating Income 464400 -345600 118800 -74250 44550
Transcribed Image Text:Contribution Margin Income Statement Sales (216000*2.15) Less: Variable Costs (216000*1.6) Contribution Margin Less: Fixed costs Operating Income 464400 -345600 118800 -74250 44550
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