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Question
| Selling price per unit ($1,500,000/30,000) | $50.00 | |
| Variable costs per unit | ||
| Direct materials ($540,000/30,000) | $18.00 | |
| Direct labor ($300,000/30,000) | 00 | |
| Indirect materials ($15,000/30,000) | 0.50 | |
| Indirect labor ($21,000/30,000) | 0.70 | |
| Utilities ($54,000 x 0.2)/30,000 | 0.36 | |
| Maintenance ($33,000 x 0.4)/30,000 | 0.44 | |
| Commissions ($45,000/30,000) | 1.50 | |
| Wages ($15,000/30,000) | ||
| Total ($960,000/30,000) | ||
| Contribution margin ($540,000/30,000) | ||
| Fixed costs: | ||
| Depreciation | $180,000 | |
| Salaries | 90,000 | |
| Utilities ($54,000 x 0.8) | 43,200 | |
| Maintenance ($33,000 x 0.6) | 19,800 | |
| Advertising | 60,000 | |
| Rent | ||
| Total fixed costs | ||
Operations at 60% of capacity, or 22,500 units:
Sales = 22,500 x $50 = $1,125,000
Total variable costs = 22,500 x $32 = $720,000
Operations at 75% of capacity, or 28,125 units
Sales = 28,125 x $50 = $1,406,250
Total variable costs = 28,125 x $32 = $900,000
| 60% of Capacity | 75% of Capacity | ||
| Sales | $1,125,000 | $1,406,250 | |
| Total variable costs | 720,000 | 900,000 | |
| Total fixed costs | |||
| Income from operations | |||
Answer
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