Drake Company produces a single product. Last year's income statement is as follows: Sales (21,000 units) $1,278,900 Less: Variable costs 879,900 Contribution margin $399,000 Less: Fixed costs 259,800 Operating income $139,200 Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $234,100 per year, but will lower variable costs to 42 percent of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming Drake makes this investment. Round all amounts to the nearest dollar. Drake CompanyBudgeted Income Statement $Sales = 1278900 Less: Variable costs = 537138 $Contribution margin = 741762 Less: Fixed costs = 493900 $Net income = 247862 Question Content Area What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit
Drake Company produces a single product. Last year's income statement is as follows: Sales (21,000 units) $1,278,900 Less: Variable costs 879,900 Contribution margin $399,000 Less: Fixed costs 259,800 Operating income $139,200 Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $234,100 per year, but will lower variable costs to 42 percent of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming Drake makes this investment. Round all amounts to the nearest dollar. Drake CompanyBudgeted Income Statement $Sales = 1278900 Less: Variable costs = 537138 $Contribution margin = 741762 Less: Fixed costs = 493900 $Net income = 247862 Question Content Area What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 40P
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Question
Drake Company produces a single product. Last year's income statement is as follows:
| Sales (21,000 units) | $1,278,900 |
| Less: Variable costs | 879,900 |
| Contribution margin | $399,000 |
| Less: Fixed costs | 259,800 |
| Operating income | $139,200 |
Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $234,100 per year, but will lower variable costs to 42 percent of sales. Units sold will remain unchanged. Prepare a
|
|
$Sales = 1278900 |
|
|
Less: Variable costs = 537138 |
|
|
$Contribution margin = 741762 |
|
|
Less: Fixed costs = 493900 |
|
|
$Net income = 247862 |
Question Content Area
What is the new break-even point in units, assuming the investment is made? In your computations, round the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.
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