CVP Analysis—Missing Data Durant Manufacturers has performed extensive studies on its costs and… 1 answer below »

CVP Analysis—Missing Data

Durant Manufacturers has performed extensive studies on its costs and production and estimates the following annual costs based on 150,000 units (produced and sold):

 

Total Annual

 

Costs

 

(150,000 units)

Direct material

$300,000

Direct labor

270,000

Manufacturing overhead

225,000

Selling, general, and administrative

150,000

Total

$945,000

Required

a. Compute Durant’s unit selling price that will yield a profit t of $300,000, given sales of 150,000 units.

b. Compute Durant’s dollar sales that will yield a projected 20 percent profit t on sales, assuming variable costs per unit are 60 percent of the selling price per unit and fixed costs are $420,000.

c.Of the $30 variable costs, 50 percent are from labor and 25 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 10 percent.