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Linda_us
Linda_us, Finance, Accounts & Homework Tutor
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Allen Company sells flags with team logos. Allen has fixed

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Allen Company sells flags with team logos. Allen has fixed costs of $588,000 per year plus variable costs of $5.50 per flag. Each flag sells for $12.50.

Prepare Allen Company’s contribution margin format income statement for the year ended December 31, 2011. Assume sales of 73,000 flags. Cost of goods sold is 60% of variable costs. Operating costs make up the rest of variable costs and all of the fixed costs.
The company is considering an expansion that will increase fixed costs by 20% and variable costs by $0.60 per flag. Compute the new breakeven point in units and in dollars. Should Allen company undertake the expansion? Give your reason for why or why not.
Chat Conversation Started
Linda :

Hi Customer

Customer :

hello

Linda :

Just to clarify so we have any other information for part 2 where we need to compute breakeven point.

Customer :

I have already done so the breakeven point is 84,000

Customer :

I'm sorry that is the not the break even point for part 2

Customer :

it it the break even point for the information given at the beggining

Linda :

The reason I was asking was if we are increasing Fixed cost as well as variable cost the breakeven point would increase hence it won't be advisable for company to increase production.

Linda :

Please recheck if both fixed cost as well as variable cost is increasing or if its given one of them is decreasing it would make more sense

Customer :

i did it says they are both increasing

Linda :

its ok then I will solve it as given both increasing

Linda :


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Linda










Customer: replied 6 years ago.
i did not get an answer this is what i getNot Found

The requested URL /uploads/lindaus/2010-10-05_155733_Allen.xls was not found on this server.
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