Question

Rundle Company currently produces and sells 7,800 units annually of a product that has a variable...

Rundle Company currently produces and sells 7,800 units annually of a product that has a variable cost of $16 per unit and annual fixed costs of $316,600. The company currently earns a $89,000 annual profit. Assume that Rundle has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $14 per unit. The investment would cause fixed costs to increase by $10,700 because of additional depreciation cost.


Required

Use the equation method to determine the sales price per unit under existing conditions (current equipment is used).

Prepare a contribution margin income statement, assuming that Rundle invests in the new production equipment.

A. Sales Price : _______

B.
RUNDLE COMPANY
Contribution margin Income statement
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Campbell Company currently produces and sells 7,400 units annually of a product that has a variable...
Campbell Company currently produces and sells 7,400 units annually of a product that has a variable cost of $9 per unit and annual fixed costs of $364,000. The company currently earns a $80,000 annual profit. Assume that Campbell has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $7 per unit. The investment would cause fixed costs to increase by $10,800 because of additional depreciation cost. Required a)Use the equation...
Newton Company currently produces and sells 4,000 units of a product that has a contribution margin...
Newton Company currently produces and sells 4,000 units of a product that has a contribution margin of $6 per unit. The company sells the product for a sales price of $20 per unit. Fixed costs are $18,000. The company is considering investing in new technology that would decrease the variable cost per unit to $8 per unit and double total fixed costs. The company expects the new technology to increase production and sales to 9,000 units of product. What sales...
Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable costs are $88 per unit. The company’s annual fixed costs are $308,000. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales Sales Variable costs Contribution margin Fixed costs Net income Sales Variable costs Contribution margin Fixed costs Net income % Sales Variable costs Contribution margin Fixed costs...
Blanchard Company manufactures a single product that sells for $100 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $100 per unit and whose total variable costs are $76 per unit. The company’s annual fixed costs are $338,400. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales % Sales Variable costs Contribution margin Fixed costs $ (2) Assume the company’s fixed costs increase by $126,000. What amount of sales (in dollars) is needed...
Blanchard Company manufactures a single product that sells for $160 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $160 per unit and whose total variable costs are $120 per unit. The company’s annual fixed costs are $629,000. The sales manager predicts that annual sales of the company’s product will soon reach 39,900 units and its price will increase to $199 per unit. According to the production manager, variable costs are expected to increase to $139 per unit, but fixed costs will remain at $629,000. The income tax rate is...
Lucent Manufacturing Company makes a product that it sells for $67 per unit. The company incurs...
Lucent Manufacturing Company makes a product that it sells for $67 per unit. The company incurs variable manufacturing costs of $14 per unit. Variable selling expenses are $13 per unit, annual fixed manufacturing costs are $186,000, and fixed selling and administrative costs are $362,800 per year. Contribution margin ratio % Break-even point in dollars Break-even point in units LUCENT MANUFACTURING COMPANY Contribution Margin Income Statement Sales Variable costs Contribution margin Fixed costs Net income
Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable costs are $192 per unit. The company’s annual fixed costs are $734,400. (1) Prepare a contribution margin income statement for Blanchard Company showing sales, variable costs, and fixed costs at the break-even point. (2) Assume the company’s fixed costs increase by $138,000. What amount of sales (in dollars) is needed to break even? BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of...
A company manufactures and sells racing bicycles to specialty retailers. The Bomber model sells for $510...
A company manufactures and sells racing bicycles to specialty retailers. The Bomber model sells for $510 and has per-unit variable costs of $204 associated with its production. The company has fixed expenses of $30,000 per month. In May, the company sold 240 of the Bomber model bikes. A. Calculate the contribution margin per unit for the Bomber. Contribution margin $ per unit B. Calculate the contribution margin ratio of the Bomber. Contribution margin ratio  % C. Prepare a contribution margin income...
A company manufactures and sells racing bicycles to specialty retailers. The Bomber model sells for $600...
A company manufactures and sells racing bicycles to specialty retailers. The Bomber model sells for $600 and has per-unit variable costs of $300 associated with its production. The company has fixed expenses of $35,000 per month. In May, the company sold 240 of the Bomber model bikes. A. Calculate the contribution margin per unit for the Bomber. Contribution margin $____ per unit B. Calculate the contribution margin ratio of the Bomber. Contribution margin ratio  %___ C. Prepare a contribution margin income...
Booth Company had sales in 2020 of $1,695,000 on 67,800 units. Variable costs totaled $1,017,000 and...
Booth Company had sales in 2020 of $1,695,000 on 67,800 units. Variable costs totaled $1,017,000 and fixed costs totaled $482,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $3.00). However, to process the new raw material, fixed operating costs will increase by $115,000. Management feels that two-thirds of the decline in the variable costs per unit should be passed on to customers in the form of a sales price reduction. The...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT