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##### Blaster Corporation manufactures hiking boots. For the coming year,

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Blaster Corporation manufactures hiking boots. For the coming year, the company has budgeted the following costs for the production and sale of 30,000 pairs of boots;Budgeted;Costs Budgeted;Costs;per Pair Percentage;of Costs;Considered;Variable;Direct materials \$ 630,000 \$21 100%;Direct labor 300,000 10 100;Manufacturing overhead (fixed and variable) 720,000 24 25;Selling and administrative expenses 600,000 20 20;--------------------------------------------------------------------------------;--------------------------------------------------------------------------------;Totals \$2,250,000 \$75;--------------------------------------------------------------------------------;--------------------------------------------------------------------------------;--------------------------------------------------------------------------------;--------------------------------------------------------------------------------;Instructions;a. Compute the sales price per unit that would result in a budgeted operating income of \$900,000, assuming that the company produces and sells 30,000 pairs. (Hint: First compute the budgeted sales revenue needed to produce this operating income.);b. Assuming that the company decides to sell the boots at a unit price of \$121 per pair, compute the following;1. Total fixed costs budgeted for the year.;2. Variable costs per unit.;3. The unit contribution margin.;4. The number of pairs that must be produced and sold annually to break even at a sales price of \$121 per pair.;a. Sales price per unit;Budgeted costs \$;Add: Budgeted operating income;--------------------------------------------------------------------------------;Budgeted sales revenue \$;Sales price per unit \$;--------------------------------------------------------------------------------;--------------------------------------------------------------------------------;b. (1) Total fixed costs;Manufacturing overhead \$ 540,000;Selling and administrative expenses;--------------------------------------------------------------------------------;Total fixed costs \$;--------------------------------------------------------------------------------;--------------------------------------------------------------------------------;(2) Variable costs and expenses per unit;Direct materials \$;Direct labor;Manufacturing overhead;Selling and administrative expenses;--------------------------------------------------------------------------------;Total variable costs per unit \$;--------------------------------------------------------------------------------;--------------------------------------------------------------------------------;(3) Unit contribution margin;Sales price per unit \$;Less: Variable costs per unit [from (2)];--------------------------------------------------------------------------------;Unit contribution margin \$;--------------------------------------------------------------------------------;--------------------------------------------------------------------------------;(4) Number of units required to break even;Fixed costs [from (1)] \$;Contribution margin per unit [from (3)] \$;Number of units required to break even

Paper#27241 | Written in 18-Jul-2015

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