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Robin Simmons is ready to complete a cost-volume-profit analysis for 2016 for the Stellar Packaging Products manufacturing plant to determine...

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Robin Simmons is ready to complete a cost-volume-profit analysis for 2016 for the Stellar Packaging Products manufacturing plant to determine if the break-even point is achieved, given the expected decline in volume. Specific costs for production of 500,000 units include the following;Stellar Packaging Products;Variable Costs Total;Fixed Costs Total;Raw materials;$ 400,000;Direct manufacturing labor;$ 200,000;Indirect manufacturing labor;$ 105,000;Factory Insurance & Utilities;$ 63,000;Depreciation -- Machinery and factory;$ 38,500;Repairs and maintenance -- factory;$ 28,000;Selling, marketing and distribution expenses;$ 40,000;$ 80,000;General and administrative expenses;$ 120,000;There are no beginning or ending inventories. The total sales for 500,000 units produced are $2,000,000.;Instructions;Answer the following questions given the fact pattern above, showing all calculations.;What is the contribution margin per unit for each chocolate bar produced, given the fact pattern above?;What is the Stellar Packaging?s U.S. division break-even point in units and dollars, given the fact pattern above?;What is the Stellar Packaging?s U.S. division margin of safety and degree of operating leverage, given the fact pattern above?;Write a brief explanation (approximately two paragraphs) that Simmons might deliver to management to inform them of the analytical outcome, given the projected revenue and cost. Does the company have to implement a cost-reduction strategy in order to break even?

 

Paper#74273 | Written in 18-Jul-2015

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