Calculate contribution margin per unit

Assignment Help Financial Accounting

Reference no: EM131208078

Delphi Company has developed a new product that will be marketed for the first time next year. The product will have variable costs of $29 per unit. Although the marketing department estimates that 49,000 units could be sold at $49 per unit, Delphi’s management has allocated only enough manufacturing capacity to produce a maximum of 35,000 units a year. The fixed costs associated with the new product are budgeted at $630,000 for the year. Delphi is subject to a 40% tax rate. Calculate contribution margin per unit. How many units of the new product must Delphi sell in the next fiscal year to break even? What is the maximum net income that Delphi can earn from sales of the new product in the next fiscal year? Delphi’s managers have stipulated that they will not authorize production beyond the next fiscal year unless the after-tax profit from the new product is at least $105,000. How many units of the new product must be sold in the next fiscal year to ensure continued production?Regardless of your answer in part (c), assume that more than the allowed production of 35,000 units will be required to meet the $105,000 net income target. Given the production constraint (maximum of 35,000 units available), what price must be charged to meet the target income and continue production past the next fiscal year?

Reference no: EM131208078

Questions Cloud

The audit budget when planning the audit : Samantha is a senior manager at a national CPA firm. She has recently taken over the planning responsibilities on her firm’s largest client, a midsize publicly traded company with multiple subsidiaries around North America. The client chose her firm ..

Manufacturer of clinical diagnostic equipment : Donna Jamison, a recent UNC graduate with four years of for-profit health management experience, was recently brought in as assistant to the chairman of the board of Computron Diagnostics, a manufacturer of clinical diagnostic equipment. The company ..

Distinguishing factor that makes arrangement co-ownership : The distinguishing factor that makes an arrangement a co-ownership as opposed to a partnership would be:

Identify the level at which engineering design : Engineering design is an activity that is vital to the success of any motor vehicle manufacturer. Identify the level at which engineering design would be classified in the cost hierarchy used with ABC for each of the following: A maker of unique edit..

Calculate contribution margin per unit : Delphi Company has developed a new product that will be marketed for the first time next year. The product will have variable costs of $29 per unit. Calculate contribution margin per unit. What is the maximum net income that Delphi can earn from sale..

New building that reduces its operating costs : A company must decide if it should move division A to a new location. If division A moves, it will be housed in a new building that reduces its operating costs by $10,000 per year forever. The new building costs $120,000.Moving division A allows divi..

What is balance of account at the end of the six year : Lamb Company deposited $15,000 annually for 6 years in an account paying 5% interest compounded annually. What is the balance of the account at the end of the 6th year?

New sprinkler system economically attractive : RealTurf is considering purchasing an automatic sprinkler system for its sod farm by borrowing the entire $45,000 purchase price. The loan would be repaid with four equal annual payments at an interest rate of 12%/year. Show the internal rate of retu..

What are the capital balances of each partner : The capital accounts of Trent Henry and Paul Chavez have balances of $148,600 and $84,200, respectively. LeAnne Gilbert and Jen Faber are to be admitted to the partnership. On December 31, journalize the entries to record the admission of (1) Gilbert..

User Account

All Pages