#### Description of this paper

##### Gardner Corporation has collected the following in...

**Description**

Solution

**Question**

Gardner Corporation has collected the following information after its first year of sales. Net sales were $1,600,000 on 100,000 units; selling expenses $240,000 (40% variable and 60% fixed); direct materials $511,000; direct labor $285,000; administrative expenses $280,000 (20% variable and 80% fixed); manufacturing overhead $360,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year. Compute (1) the contribution margin for the current year and the projected year, and (2) the fixed costs for the current year. (Assume that fixed costs will remain the same in the projected year.) (Round answers to 0 decimal places, e.g. 125.) Contribution margin-Current year $ Contribution margin-Projected year $ Fixed costs-Current year& projected year $ Compute the break-even point in units and sales dollars for the current year. (Round calculations for unit costs to 2 decimal places, e.g. 2.25. Round final answers to 0 decimal places, e.g. 125.) Breakeven point (units) units Breakeven point (dollars) $ The company has a target net income of $310,000. What is the required sales in dollars for the company to meet its target? (Round answer to 0 decimal places, e.g. 125.) $ If the company meets its target net income number, by what percentage could its sales fall before it is operating at a loss? That is, what is its margin of safety ratio? (Round answer to 1 decimal place, e.g. 10.5.)

Paper#9751 | Written in 18-Jul-2015

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