Culture

Question 2-48
| 2006 | 10% increase | 2007 |
Net Sales |               68,222.00 |           6,822.20 |                 75,044.20 |
Cost of product sold |               33,125.00 |           3,312.50 |                 36,437.50 |
Selling, gen & Admin |               21,848.00 | |                 21,848.00 |
Operating Income |               13,249.00 |   |                 16,758.70 |
% | 19.42 | | 22.33 |
| | | |
The percentage of income differs from the increase in sales because the selling, general, and administrative expenses remained constant while the company produced 10% more product.   Because the company only increased the direct costs associated with production, the numbers reflect more efficiency as the percentage of operating income increased from 19.42 to 22.33 percent.
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Question 2-61
| | Old | | New | |
Unit variable cost | | | | | |
Material | | 0.88 | | 0.88 | |
Labor | | 1.22 | | 0.22 | |
Total per unit | | 2.1 |   | 1.1 | |
| | | | | |
Monthly fixed | | | | | |
Rent | | 450000 | | 875000 | |
super labor | | 80000 | | 175000 | |
other | | 50000 | | 90000 | |
Total | | 580000 |   | 1140000 | |
| | | | | |
3 | | | | | |
Profit @3.10 |                     600,000 |           1,260,000 | |               660,000 | |
1860000 | |               580,000 | |             1,140,000 | |
| |           1,840,000 | |             1,800,000 | |
| | | | | |
| |                 20,000 | |                   60,000 | |
| | | | | |
Contributed margin | 1 | | 2 | |
| | | | | |
Break even - | | 580000 | | 570000 | |
| | | | | |

Based on this calculation, 600,000 units are enough to see profits. 600,000*2.1 – fixed expenses generated a profit of 20,000.   600,000*1.1...