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e) If Haas Company plans to produce and sell 90,000 units, how much can they expect their shipping costs to be for the period? Y = 80.000 +1.790,000) Using historical data for future decisions: Assume the information for Years 1, 2 and 3 from CONNECT now represent historical experience. Haas Company can use this information to consider operational changes for Year 4. For Year 4 assume Haas Company will produce and sell the same number of units as they sold in Year 3 from your CONNECT problem (given data). Remember when a company sells the same number of units they produce, product costs equal product expenses and there will be no change to inventory values. 5) Use the variable costing information (given and results) from CONNECT to provide the information required below. Express Net Operating Income in a formula like that used on page 196 of your text. Profit-unit CMO) - Fixed Expenses. Remember to SHOW YOUR WORKIH a) Sales price per unit $52 b) Variable Expense per unit 40 (include S&A!!) c) Contribution margin per unit 2-ES d) Contribution margin percentratio YODC/3 380 = 7 e) Contribution margin in dollars SEXO.CO20.000 = 360,000 1) Profit formula NOI - Profit 0-240 000, where the first blank is the CM per unit and the second blank is Fixed Expenses Note: Check figures must be supported to earn credit for grading purposes. Piotit -18 x 240.000) = 1,420,000 6) Complete the table below assuming the indicated number of units were produced and sold. Remember to include S&A variable expenses in your variable expenses. Units Sales Variable Fixed Total produced/sold Revenue Expenses Expenses Expenses Profit/NOI 0 O 20.000 0.00 40.000 INOMOV 1,200.00 60.000 BTUD BULDO 80,000 Note: Check figures must be supported to earn credit for grading purposes. 7) Review pages 223 and 224 from the textbook. Prepare a Cost-Volume Profit graph for Haas Company a) Use the graph attached; label both the x and y axis using appropriate increments Dollar values should be used for the y axis and number of units for the x axis b) Plot the Fixed Expense line. Label it c) Plot the Sales Revenue line and label it d) Plot the Total Expense line and label it. e) Indicate the Break-even Point on the graph and label it. 1 Shade and label the portion of the graph that indicates the company's positive profit. Base Year calculations: In order for Haas Company to consider any alternatives, they must first understand their current or "base" position. Break-even, Margin of Safety and Degree of Operating Leverage are 3 criteria that can indicate the company's current situation. Use Haas's anticipated Year 4 information for these "base year" calculations 8) Margin of Safety evaluates the company's position compared to "break-even". Use the information from 6) above and your CONNECT problem to summarize the information in the table below Calculate the Margin of Safety in (a) dollars (b) units and (c) percent for Year 4. Remember, Haas Company produces and sells the same number of units in Year 4 that they SOLD in year 3. Break-even Base Year 4 Units Sales Revenue B101000 NOI .30000 BBL a) MoS dollars 260.000 200 3,380000 - 3, Dacro b) MoS units O/000500 c) MoS % Note: Check figures must be supported to earn credit for grading purposes. 3, 3801o0o 9) Calculate the Degree of Operating Leverage for Year 4, assuming nothing else changes 260.000 - 13 200000 52-2.60 Looking at changes: Look at cach situation below independently as a change to the "base" position 10) Changing sales price: The new marketing director believes that Hans Company can sell more units of its product if they lower their sales price by 5% per unit a) Calculate the new ) sales price and (ii) contribution margin per unit i) new sales price $44,90 ii) CM per unit iii) What will the new Profit formula be? 5.4Q -2400000 = 49,4 b) How many units will they need to sell to make the same operating income (NOI) as originally projected for year 4 (base assumption)? Note: Check figures must be supported to earn credit for grading purposes. 20000 / 5.4 -3, 704 c) Haas Company can sell twice as many units (2 times original units) with the decreased sales price, how much operating income will they make? (1) Should they lower the price? Explain your answer i) operating income 1320,000) ii) Should they? units withe the sale price Nu because they make less compared to the 60.000 fooox 2 = 100/000 5.-7 X/20100 = 648.000 - 960.000 - 3200 11) Increase to costs: The production manager is anticipating an increase to labor rates in the coming year such that variable expenses will increase by $1.50. Hint: You may want to update the Profit formula for this change to assist in the calculations required here. Remember to consider this change to the "base" assumption and disregard your work in 10) a) W will the CM ratio and Break-Even point in units be with the labor increase? Note - Requirement asks for CM ratio, NOT contribution margin in dollars or contribution per unit. 7, 44 +150 = 45.50 52-45,5 = 6.5 6.5/52= 2,5%CM b) If they produce and sell the same number of units for Year 4. what will their new Net Operating Income, NOI, be? c) How many units will Haas need to sell to maintain the same operating income as originally planned for Year 4? Note: Check figures must be supported to earn credit for grading purposes. d) Assume Haas Company wants to earn a profit of $50,000 for Year 4 with "base" assumption of units produced/sold and the cost increase discussed here. What sales price (price per unit) should they use to sell their product? 12) New Plant? The company is considering construction of a new automated manufacturing plant the new plant would slash variable expenses by 30% but would cause fixed expenses per year to double Haas still plans to produce and sell the same number of units in Year 4 (base). a) If the new plant is built, what would be the company's new (1) contribution margin per unit, (ii) fixed expenses and (ii) the new profit formula? Complete the table below. i) New CM per unit ii) New Fixed expenses iii) New profit formula New Break-even New Year 4 Units Sales Revenue NOI Note: Check figures must be supported to earn credit for grading purposes. a) Assume Haas sells the same units as planned for Year 4 in the new plant, calculate the new margin of safety in () units) (ii) dollars and (iii) percent. Has margin of safety improved or declined? Explain/comment in 10 to 30 words i) MoS units ii) MoS dollars iii) MoS percent Note: Check figures must be supported to earn credit for grading purposes. b) Calculate the degree of operating leverage. Has operating leverage improved or declined from the "base" calculation in 9)? Discuss in 10 to 30 words. c) If you were a member of top management, would you have been in favor of constructing the new plant? Explain in 10 to 30 words 7 Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per uniti Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year : Fixed manufacturing overhead Fixed selling and administrative expenses 23 15 6 1 $ $ 240,000 $ 180,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $52 per unit. Required: 1. Compute the company's break-even point in unit sales. 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below. BBB VICON even pullit III UIT saic 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1 Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Req 3A Req 3B Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses intermediate calculations and final answers to 2 decimal places.) Year 1 Year 2 Year 3 Unit product cost $ 48.00 $ 47.20 $ 50.00 ( Req 2B Req3B > e) If Haas Company plans to produce and sell 90,000 units, how much can they expect their shipping costs to be for the period? Y = 80.000 +1.790,000) Using historical data for future decisions: Assume the information for Years 1, 2 and 3 from CONNECT now represent historical experience. Haas Company can use this information to consider operational changes for Year 4. For Year 4 assume Haas Company will produce and sell the same number of units as they sold in Year 3 from your CONNECT problem (given data). Remember when a company sells the same number of units they produce, product costs equal product expenses and there will be no change to inventory values. 5) Use the variable costing information (given and results) from CONNECT to provide the information required below. Express Net Operating Income in a formula like that used on page 196 of your text. Profit-unit CMO) - Fixed Expenses. Remember to SHOW YOUR WORKIH a) Sales price per unit $52 b) Variable Expense per unit 40 (include S&A!!) c) Contribution margin per unit 2-ES d) Contribution margin percentratio YODC/3 380 = 7 e) Contribution margin in dollars SEXO.CO20.000 = 360,000 1) Profit formula NOI - Profit 0-240 000, where the first blank is the CM per unit and the second blank is Fixed Expenses Note: Check figures must be supported to earn credit for grading purposes. Piotit -18 x 240.000) = 1,420,000 6) Complete the table below assuming the indicated number of units were produced and sold. Remember to include S&A variable expenses in your variable expenses. Units Sales Variable Fixed Total produced/sold Revenue Expenses Expenses Expenses Profit/NOI 0 O 20.000 0.00 40.000 INOMOV 1,200.00 60.000 BTUD BULDO 80,000 Note: Check figures must be supported to earn credit for grading purposes. 7) Review pages 223 and 224 from the textbook. Prepare a Cost-Volume Profit graph for Haas Company a) Use the graph attached; label both the x and y axis using appropriate increments Dollar values should be used for the y axis and number of units for the x axis b) Plot the Fixed Expense line. Label it c) Plot the Sales Revenue line and label it d) Plot the Total Expense line and label it. e) Indicate the Break-even Point on the graph and label it. 1 Shade and label the portion of the graph that indicates the company's positive profit. Base Year calculations: In order for Haas Company to consider any alternatives, they must first understand their current or "base" position. Break-even, Margin of Safety and Degree of Operating Leverage are 3 criteria that can indicate the company's current situation. Use Haas's anticipated Year 4 information for these "base year" calculations 8) Margin of Safety evaluates the company's position compared to "break-even". Use the information from 6) above and your CONNECT problem to summarize the information in the table below Calculate the Margin of Safety in (a) dollars (b) units and (c) percent for Year 4. Remember, Haas Company produces and sells the same number of units in Year 4 that they SOLD in year 3. Break-even Base Year 4 Units Sales Revenue B101000 NOI .30000 BBL a) MoS dollars 260.000 200 3,380000 - 3, Dacro b) MoS units O/000500 c) MoS % Note: Check figures must be supported to earn credit for grading purposes. 3, 3801o0o 9) Calculate the Degree of Operating Leverage for Year 4, assuming nothing else changes 260.000 - 13 200000 52-2.60 Looking at changes: Look at cach situation below independently as a change to the "base" position 10) Changing sales price: The new marketing director believes that Hans Company can sell more units of its product if they lower their sales price by 5% per unit a) Calculate the new ) sales price and (ii) contribution margin per unit i) new sales price $44,90 ii) CM per unit iii) What will the new Profit formula be? 5.4Q -2400000 = 49,4 b) How many units will they need to sell to make the same operating income (NOI) as originally projected for year 4 (base assumption)? Note: Check figures must be supported to earn credit for grading purposes. 20000 / 5.4 -3, 704 c) Haas Company can sell twice as many units (2 times original units) with the decreased sales price, how much operating income will they make? (1) Should they lower the price? Explain your answer i) operating income 1320,000) ii) Should they? units withe the sale price Nu because they make less compared to the 60.000 fooox 2 = 100/000 5.-7 X/20100 = 648.000 - 960.000 - 3200 11) Increase to costs: The production manager is anticipating an increase to labor rates in the coming year such that variable expenses will increase by $1.50. Hint: You may want to update the Profit formula for this change to assist in the calculations required here. Remember to consider this change to the "base" assumption and disregard your work in 10) a) W will the CM ratio and Break-Even point in units be with the labor increase? Note - Requirement asks for CM ratio, NOT contribution margin in dollars or contribution per unit. 7, 44 +150 = 45.50 52-45,5 = 6.5 6.5/52= 2,5%CM b) If they produce and sell the same number of units for Year 4. what will their new Net Operating Income, NOI, be? c) How many units will Haas need to sell to maintain the same operating income as originally planned for Year 4? Note: Check figures must be supported to earn credit for grading purposes. d) Assume Haas Company wants to earn a profit of $50,000 for Year 4 with "base" assumption of units produced/sold and the cost increase discussed here. What sales price (price per unit) should they use to sell their product? 12) New Plant? The company is considering construction of a new automated manufacturing plant the new plant would slash variable expenses by 30% but would cause fixed expenses per year to double Haas still plans to produce and sell the same number of units in Year 4 (base). a) If the new plant is built, what would be the company's new (1) contribution margin per unit, (ii) fixed expenses and (ii) the new profit formula? Complete the table below. i) New CM per unit ii) New Fixed expenses iii) New profit formula New Break-even New Year 4 Units Sales Revenue NOI Note: Check figures must be supported to earn credit for grading purposes. a) Assume Haas sells the same units as planned for Year 4 in the new plant, calculate the new margin of safety in () units) (ii) dollars and (iii) percent. Has margin of safety improved or declined? Explain/comment in 10 to 30 words i) MoS units ii) MoS dollars iii) MoS percent Note: Check figures must be supported to earn credit for grading purposes. b) Calculate the degree of operating leverage. Has operating leverage improved or declined from the "base" calculation in 9)? Discuss in 10 to 30 words. c) If you were a member of top management, would you have been in favor of constructing the new plant? Explain in 10 to 30 words 7 Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per uniti Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year : Fixed manufacturing overhead Fixed selling and administrative expenses 23 15 6 1 $ $ 240,000 $ 180,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $52 per unit. Required: 1. Compute the company's break-even point in unit sales. 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below. BBB VICON even pullit III UIT saic 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1 Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Req 3A Req 3B Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses intermediate calculations and final answers to 2 decimal places.) Year 1 Year 2 Year 3 Unit product cost $ 48.00 $ 47.20 $ 50.00 ( Req 2B Req3B >

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