Read Me F 18 HW 6 Help Save Exit Required information The f

Read Me F 18 HW 6 Help Save & Exit Required information The following information applies to the questions displayed below) This year Burchard Company sold 45,000 units of its only product for $18.00 per unit Manufacturing and selling the 20 product required $130,000 of fixed manufacturing costs and $190.000 of fixed selling and administrative costs, Its per unt variable costs follow $5.00 4/00 Direct labor (paid on the basis of c units) Variable overhead costs Prire 0.30 Next year the company will use new material, which, w\" reduce materia\" costs by 70% and direct labor costs by 30% and is considering an increase in the unit selling price to r the number of units sold because the factory\'s output is nearing its annual output capacity of 50,000 units. Two plans are d costs from using the new material Under plan 2, the Under both plans 1 and 2, the total fixed costs and the variable costs per unit for overhead and for selling and administrative costs will remain the by 15%. Prevof Nexr

Solution

Solution:

Burchard Company
Forecasted contribution margin income statement
Particulars	Plan 1	Plan 2
Nos of units	45000	38250
Selling price per unit	$18.00	$23.40
Sales	$810,000.00	$895,050.00
Variable cost:
Direct material	$67,500.00	$57,375.00
Direct labor	$126,000.00	$107,100.00
Variable overhead cost	$22,500.00	$19,125.00
Variable selling and administrative cost	$13,500.00	$11,475.00
Total variable cost	$229,500.00	$195,075.00
Contribution margin	$580,500.00	$699,975.00
Fixed Costs:
Fixed manufacturing cost	$130,000.00	$130,000.00
Fixed selling and administrative cost	$190,000.00	$190,000.00
Total Fixed cost	$320,000.00	$320,000.00
Net Operating Income	$260,500.00	$379,975.00