accounting homework assignment-lash Co. manufactures 1GB flash drives and other problem

lash Co. manufactures 1GB flash drives. Price and cost data for the company are as follows:


Sales price per unit $20.00
Variable Costs per unit:
Direct materials 6.40
Direct labor 5.00
Overhead 2.00
Operating costs 1.40
Monthly Fixed Costs:
Overhead $191,400
Operating Costs 276,600

1. What is the company’s contribution margin per unit?

1. What is the company’s contribution margin ratio?

1. What would be the company’s monthly operating income if the company sold 150,000 units?

1. What is the breakeven point is UNITS AND SALES DOLLARS?

1. To earn a monthly profit of $260,000, how many units would be have to be sold?

1. To earn a monthly profit of $260,000, what must sales dollars amount to?

1. Using the information calculated in questions 4, 5, and 6, calculate the margin of safety in DOLLARS AND UNITS as well as the PERCENTAGE OF SALES.

1. Using the information in question (3), compute the operating leverage factor.

1. If the sales volume increases by 8%, by what percentage will the operating income increase?

1. Management is currently in contract negotiations with the labor union. If the negotiations are accepted, direct labor costs will increase by 10% and fixed costs will increase by $22,500 per month. What will the new breakeven point be in SALES UNITS AND SALES DOLLARS?

ABC incurs the following costs for 20,000 pairs of its high-tech hiking socks:
Direct Materials $20,000
Direct Labor 80,000
Variable Manufacturing Overhead 40,000
Fixed Manufacturing Overhead 80,000


Another manufacturer has offered to sell ABC similar socks for $10 a pair, a total purchase cost of $200,000. If ABC outsources and leaves the plant idle, it can save $50,000 of fixed overhead cost. Or the company can use the unused facilities to make other products that will contribute $70,000 to profits. In this case, the company will not be able to avoid any fixed costs.


REQUIRED:

1. Identify and analyze the alternative courses of action for ABC.

1. What is the best course of actions? SHOW ALL CALCULATIONS.

1. List three QUALITATIVE FACTORS which should be considered in making the decision.

Hawaii Sunglass Co. sells its sunglasses for about $150 per pair. Suppose the company incurs the following average costs per pair;


Direct Materials $40
Direct Labor 12
Variable Overhead 8
Variable Marketing Costs 4
Fixed Overhead 20 (Total fixed costs are $2,000,000 for
100,000 pairs of sunglasses)


Hawaii has enough idle capacity to accept a one-time only special order from LensCrafters for 20,000 pairs of sunglasses at $76 per pair. Hawaii will not incur any variable marketing costs for the order.


REQUIREMENTS:

1. How would accepting the order affect Hawaii’s operating income? SHOW ALL OF YOUR WORK!

1. Identify 3 QUALITATIVE FACTORS that should be considered by the Hawaii managers in deciding whether to accept the order.

1. Hawaii’s marketing manager argues against accepting the special order because the offer price of $76 is less than Hawaii’s $84 cost to make the sunglasses. Explain whether this analysis is correct or not correct.

Consider the following statement from a FORTUNE magazine article:

For tracking where money goes, budgets are dandy. They become iniquitous (evil) when they are made to do more – when the budget becomes management’s main tool to gauge performance.


REQUIRED: Briefly explain why you agree or disagree with this statement. (What are the advantages of having a budget?)