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(Answered)-Robin Simmons is ready to complete a cost-volume-profit analysis
Robin Simmons is ready to complete a cost-volume-profit analysis for 2016 for the Stellar Packaging Products manufacturing plant to determine if the break-even point is achieved, given the expected decline in volume. Specific costs for production of 500,000 units include the following:
Stellar Packaging Products | Variable Costs Total | Fixed Costs Total |
?Raw materials | ?%bodyamp;nbsp;??????? 400,000 | ? |
?Direct manufacturing labor | ?%bodyamp;nbsp;??????? 200,000 | ? |
?Indirect manufacturing labor | ? | ?%bodyamp;nbsp;????????? 105,000 |
?Factory Insurance & Utilities | ? | ?%bodyamp;nbsp;?????????? 63,000 |
?Depreciation -- Machinery and factory | ? | ?%bodyamp;nbsp;?????????? 38,500 |
?Repairs and maintenance -- factory | ? | ?%bodyamp;nbsp;?????????? 28,000 |
?Selling, marketing and distribution expenses | ?%bodyamp;nbsp;?????????? 40,000 | ?%bodyamp;nbsp;?????????? 80,000 |
?General and administrative expenses | ? | ?%bodyamp;nbsp;????????? 120,000 |
There are no beginning or ending inventories. The total sales for 500,000 units produced are $2,000,000.
Instructions:
Answer the following questions given the fact pattern above, showing all calculations.
- What is the contribution margin per unit for each chocolate bar produced, given the fact pattern above?
- What is the Stellar Packaging?s U.S. division break-even point in units and dollars, given the fact pattern above?
- What is the Stellar Packaging?s U.S. division margin of safety and degree of operating leverage, given the fact pattern above?
- Write a brief explanation (approximately two paragraphs) that Simmons might deliver to management to inform them of the analytical outcome, given the projected revenue and cost. Does the company have to implement a cost-reduction strategy in order to break even?
Robin Simmons is ready to complete a cost-volume-profit analysis for 2016 for the Stellar Packaging Products manufacturin
point is achieved, given the expected decline in volume. Specific costs for...
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DATE ANSWEREDOct 07, 2020
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