1)
a. What is the breakeven in units?
b. The margin of safety in unit for:
i. 2016
ii. 2017
iii. 2018
2)A new piece of manufacturing equipment is being considered for purchase. this machine is projected to reduce total cost of goods sold 18% (based on 2018 actual results) and have a useful life of 5 years. If the machine cost $2,500,00 should it be purchased? Explain
3)The company has calculated that 40% of the variable cost of goods sold are attributable to direct materials, and 60% of the variable cost of goods sold are associated with direct labor. What is the direct materials cost per item 2018?
Midwest Manufacturing
Statement of Income
2016
2017
2018
$ 5,645,357 $ 5,814,718 $ 6,163,601
Sales
Cost of Goods Sold:
Variable Costs
Fixed Costs
Total Cost of Goods Sold
1,467,793
395,175
1,862,968
1,395,532
523,325
1,918,857
1,787,444
369,816
2,157,260
Gross Profit
3,782,389
3,895,861
4,006,341
Administrative & Selling Expenses:
Variable Administrative & Selling Costs
Fixed Administrative & Selling Costs
395,175
959,711
523,325
1,104,796
523,906
1,016,994
Total Administrative Costs
1,354,886
1,628,121
1,540,900
Net Income
$ 2,427,504 $ 2,267,740 $ 2,465,440
Supplemental Information
2016
2017
2018
Unit Costing Summary:
Units Sold
100,810
118,531
107,680
75,376
Direct Labor Hours
75,607
77,045
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