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Whittier Company plans to sell 1,000 mowers at $400 each in the coming year Product costs include: Direct materials per mower $180 direct labor per mower $100 Variable factory overhead per mower

Whittier Company plans to sell 1,000 mowers at $400 each in the coming year. Product costs include: Direct materials per mower $180 direct labor per mower $100 Variable factory overhead per mower $25 Total fixed factory overhead $15,000 Variable selling expense is a commission of $20 per mower; fixed selling and administrative expense totals $30,000. a. Prepare a contribution margin income statement. b. Calculate the contribution margin ratio. c. Calculate the break-even point in sales dollars. d. Calculate the margin of safety, in terms of sales revenue. Scenario 2 The executive team at Whittier Company has requested that you perform some analysis. In some cases, you will need to rearrange the equations used above in question parts b, c or d to perform the requested analysis. Respond to question parts e - k in this CengageNOW problem regarding the analysis. e. The executive team has set a contribution margin ratio goal of 20%. Will a 1% increase in the unit selling price achieve this goal? Additionally the executive team has asked you to determine the unit selling price that will achieve the contribution margin ratio goal of 20%. What is the unit selling price that you will report to the executive team? $ f. The sales manager is opposed to increasing the unit selling price. She believes that the number of units sold will drop if the unit selling price is increased. You have been asked to analyze the impact of decreasing variable expenses, rather than inc

Apr 07 2020 View more View Less

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