2023 ASSIGNMENT BeeGee Company operating at full capacity sold 150 000 units at a | Assignments Online
2023 ASSIGNMENT BeeGee Company operating at full capacity sold 150 000 units at a | Assignments Online
Assignments Online 2023 Business Finance
| ASSIGNMENT | |||||||||||||
| BeeGee Company, operating at full capacity, sold 150,000 units at a price of $116 per unit during | |||||||||||||
| the current year. Its income statement is as follows: | |||||||||||||
| Sales | $17,400,000 | ||||||||||||
| Cost of Goods Sold | 6,000,000 | ||||||||||||
| Gross Profit | $11,400,000 | ||||||||||||
| Expenses | |||||||||||||
| Selling Expenses | $4,000,000 | ||||||||||||
| Administrative Expenses | 3,000,000 | ||||||||||||
| Total Expenses | 7,000,000 | ||||||||||||
| Income from Operations | $4,400,000 | ||||||||||||
| Consideration | |||||||||||||
| Management is considering a plant expansion program for the following year that will permit an increase | |||||||||||||
| of $3,625,000 in yearly sales. The expansion will increase fixed costs by $1,000,000 but will not affect | |||||||||||||
| the relationship between sales and variable costs. | |||||||||||||
| The division of costs between variable and fixed is as follows: | |||||||||||||
| Variable | Fixed | ||||||||||||
| Cost of goods sold | 80% | 20% | |||||||||||
| Selling expenses | 75% | 25% | |||||||||||
| Administrative expenses | 70% | 30% | |||||||||||
| Required: | |||||||||||||
| 1. Determine the total varible costs and the total fixed costs for the current year? | |||||||||||||
| 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year? | |||||||||||||
| a. | |||||||||||||
| b. $50 | |||||||||||||
| 3. Compute the break-even sales (units) for the current year? | |||||||||||||
| 4. Compute the break-even sales (units) under the proposed program for the following year? | |||||||||||||
| 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $4,400,000 of income from operations that was earned in the current year. | |||||||||||||
| 6. Determine the maximum income from operations possible with the expanded plant. | |||||||||||||
| 7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? | |||||||||||||
| 8. Based on the data given, would you recommend accepting the proposal? Explain. | |||||||||||||
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