Business, 22.04.2020 00:45 mwilliams457

Wildhorse Corporation has collected the following information after its first year of sales. Sales were $1,250,000 on 125,000 units, selling expenses $250,000 (40% variable and 60% fixed), direct materials $496,000, direct labor $34,900, administrative expenses $280,000 (20% variable and 80% fixed), and manufacturing overhead $358,000 (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. Collapse question part (a) 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.) (1) Contribution margin for current year $ Contribution margin for projected year $ (2) Fixed Costs

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Answer from: ineedhelplolol

Contribution Margin for current year $312,500

Total Fixed Costs 481,400

Contribution Margin for projected year $373,450

Fixed Costs for the projected year will remain same 481,400

Explanation:

Wildhorse Corporation

Sales $1,250,000

Direct materials $496,000,

Direct labor $34,900,

Manufacturing overhead

Variable (70% ) of $358,000= 250,600

Manufacturing Margin 468,500

Administrative expenses

Variable (20% )of $280,000= 56,000

Selling expenses

Variable (40% )of $250,000= 100,00

Total Variable Costs 910,500

Contribution Margin for current year $312,500

Total Fixed Costs 481,400

Selling expenses

Fixed 60% of ,$250,000= 150,00

Administrative expenses

Fixed 80% of $280,000= 224,000

Manufacturing overhead

Fixed 30% of $358,000 = 107,400

Wildhorse Corporation

Sales $1, 375,000

Costs / no of units = ( $1,250,000/125,000= $10 per unit )

( 125000+12500= 137,500 units * units price = $ 10 = 13750,000)

Total Variable Costs 910,500 for 125,000 units

Unit Variable Costs =910,500/ 125,000 units =$ 7.284

Total variable costs for 137,500 units = $ 1001550

Contribution Margin for projected year $373,450

We calculate the total variable costs and get the unit variable costs by dividing with the number of units given. Now we multiply it with additional 10 % increase in the units to get the Contribution Margin for projected year .

Fixed Costs for the projected year will remain same 481,400

Selling expenses

Fixed 60% of ,$250,000= 150,00

Administrative expenses

Fixed 80% of $280,000= 224,000

Manufacturing overhead

Fixed 30% of $358,000 = 107,400

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