Prepare a contribution margin income statement for last year.
Calculate the company’s contribution margin ratio and breakeven point in sales units
Plainfield’ Direct labor rate is going to go $0.40 a dozen next year, assuming that the selling price stays at $ 2.50 a dozen calculate next years contribution margin and break even point in sales units.
Plainfield’s management is thinking about automating the production process ,a change that would reduce variable cost by $0.60 a dozen but would raise fixed costs by $150,000 a year.. If the company undertakes the automatic project how would it contribution margin and breakeven point in sales unit be affected?
Assuming that Plainfield s dose go ahead with the automatic project (see requirement D), how many cookies will the company have to sell at $2.50 dozen to earn the same income last year?
What are some of the nonfinancial aspect of the automatic decision that Plainfield management should considered when deciding whether to embark on the automotive project or not.
ACCOUNTING Breakeven Point, Cost Structure, and Target Sales SOLUTION
