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In the following chart you will find the expenses when Sheldon Shirts produces and sells $10,000$ shirts:

Factory rent $$42,000$

Company advertising $18,000$

Wages paid to seamstresses $75,000$

Straight line depreciation on salespersons$$ vehicles $25,000$

Pins $1,000$

Utilities for factory $22,000$

Cutting room supervisor$$s salary $30,000$

President$$s salary $75,000$

Fabric $37,000$

Thread $900$

Factory insurance $15,000$

Straight line depreciation on sewing machines $6,000$

Wages paid to cutters $50,000$

Sales commissions $10\%$ of sales

Selling price per unit $60$

a$.$ Compute:

$1.$ Direct materials.

$2.$ Direct labor.

$3.$ Fixed Manufacturing overhead.

$4.$ Variable manufacturing overhead.

$5.$ Total manufacturing costs.

$6.$ Prime cost.

$7.$ Conversion cost.

$8.$ Fixed period cost.

$9.$ Variable period cost.

b$.$ Calculate the break$-$even point in units and verify the BEP.

c$.$ How much dollars would they have to sell to get a $$90,000$ profit?

d$.$ What is the margin of safety in percentage of sales? What does it mean?

e$.$ If the sales increase by $5\%,$ how much will the income increase in dollars?

f$.$ The company is considering using a different material that costs $10\%$ more but will allow them

to reduce the manufacturing fixed costs by $5\%.$ Should they change?

g$.$ If they accept the changes in f$,$ how many units do they have to sell to break even?

Write the report addressed to the production manager indicating if the company should change the

material or not. Provide a summary of your analysis

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