+1-415-670-9189
info@expertsmind.com
Assume model 4399 requires the purchase of additional
Course:- Accounting Basics
Reference No.:- EM13601496




Assignment Help
Assignment Help >> Accounting Basics

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow.

  • Model no. 6754:
  • Variable costs, $20.00 per unit
  • Annual fixed costs, $985,900
  • Model no. 4399:
  • Variable costs, $10.80 per unit
  • Annual fixed costs, $1,114,000

Corrigan's selling price is $67 per unit for the universal gismo, which is subject to a 5 percent sales commission. (In the following requirements, ignore income taxes.)

Required:
1. How many units must the company sell to break even if Model 6754 is selected? (Do not round intermediate calculations and round your final answer to the nearest whole number.)
Break-even points____units

2-a.Calculate the net income of the two systems if sales and production are expected to average 42,000 units per year. (Omit the "$" sign in your response.)

  • Net Income
  • Model 6754_________ $
  • Model 4399_________ $

2-b. Which of the two systems would be more profitable?

  • Model 6754
  • Model 4399

3.Assume Model 4399 requires the purchase of additional equipment that is not reflected in the preceding figures. The equipment will cost $430,000 and will be depreciated over a five-year life by the straight-line method. How many units must Corrigan sell to earn $969,000 of income if Model 4399 is selected? As in requirement (2), sales and production are expected to average 42,000 units per year. (Do not round intermediate calculations and round your final answer to the nearest whole number.)
Required sales____units

4.Ignoring the information presented in part (3), at what volume level will the annual total cost of each system be equal? (Round your answer to the nearest whole number.)

Volume leve_____units




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
Carleton Service Center just purchased an automobile hoist for $14,947. The hoist has a 5-year life and an estimated salvage value of $1,410. Compute the payback period for t
Southern Company began operations when it issued common stock for $100,000 cash. It paid $96,000 cash in advance for a one year contract to lease delivery equipment for the bu
Record each of the following transactions in general journal form and then show the effect of the transaction in a horizontal statements model. The first transaction is shown
This video provides a nice summary of the topics to be discussed during this course, which will be a combination of financial and managerial accounting. What are some of th
Cincinnati Million, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions.
What is the break-even sales (units) required by Morgana Video Edits LLC if fixed costs are reduced by $40,000 if fixed costs are $300,000, the unit selling price is $25, an
After numerous campus interviews, Steve Baden, a senior at Great Northern College, received two office interview invitations from the Baltimore offices of two large firms.
Journalize the following transactions in the accounts of Food Unlimited Company, a restaurant supply company that uses the allowance method of accounting for uncollectible r