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# With the help of your chief financial officer (CFO), you have

### Customer Question

With the help of your chief financial officer (CFO), you have put together the following preliminary budget figures based on last year's numbers for a planned production and sales level of 4,000 units per month:

Building depreciation
\$200,000/yr.

Machine operators
\$100,000/yr.

Management staff
\$400,000/yr.

Direct materials
\$4,000,000/yr.

Other expenses that seem to vary based on production levels
\$3,000,000/yr.

Other expenses that don't seem to vary
\$1,300,000/yr.

Selling price per unit
\$5,000/unit

Utilities:
This category is difficult to analyze; a part of it is related to the building's heat and light, whereas a part of it is used in the manufacturing process itself. You have the following data to which you will apply the high-low method:

•When there is no production, utility costs are \$20,000/month.
•When production levels reached 4,000 units/month, utility costs totaled \$40,000/month.

You are planning for the future and working on a report based on data from last year's actual performance. You are going to use the breakeven formula to determine the business's breakeven point and to answer some important questions regarding your data.

Using only the data from last year's actual performance, write a report answering the following questions:
•Which of these 8 cost categories would be considered variable, and why?
•Which of these 8 cost categories would be considered fixed, and why?
•Which costs would be considered mixed (i.e., semivariable or semifixed)?
•Ignoring utility costs altogether, what is the contribution margin per unit, in dollars and in percentage?
•Ignoring utility costs altogether, what is the breakeven level of sales?
•Ignoring utility costs altogether, if instead of breaking even, the firm wants to make \$10,000/month profit, answer the following:
◦How many units must be sold each month?
◦To how many sales dollars is this unit volume equivalent?
•In year 2, the chief executive officer (CEO) plans to add \$300,000/year of expense in added administrative salaried head count. Ignoring utility costs altogether, how many additional units must be sold just to pay for this added expense?
•Utilities: How many dollars of the utility bill are fixed? What is the variable cost per unit of utilities?
Show all calculations.
Submitted: 4 years ago.
Category: Homework
Expert:  Manal Elkhoshkhany replied 4 years ago.
No no not the full amount of course but I would need to check the questions again. Trust me even when I have the solutions I sometimes (like now) cannot find the time to even search as I have a lot of due assignments. Will post by the after noon tomorrow max
Expert:  Manal Elkhoshkhany replied 4 years ago.

Hello and thank you for requesting me

Thank you

Customer: replied 4 years ago.

Tomorrow will be fine! I've worked with you before and you've always been so helpful so I am willing to wait until you can fit my question into your rotation.

Thanks!!!!

Expert:  Manal Elkhoshkhany replied 4 years ago.
Thank you, XXXXX XXXXX advise the name of the book you are using: Title, author's name, and edition
Customer: replied 4 years ago.

Title: Health care finance "basic tools for nonfinancial managers"

Third edition

Author: Judith J. Baker and R. W. Baker

Customer: replied 4 years ago.

Greetings,

Were you able to get the information you needed from the information I provided? Do you have an estimated time frame you will be able to answer my question?

I would like to submit another question if you are not too busy...please let me know

Customer: replied 4 years ago.

If you are unable to assist I would like to open my question up for someone else to help me

Thanks!

Expert:  Manal Elkhoshkhany replied 4 years ago.
I apologize, I cannot help with the work. The question is open to other experts anyway, but when is your deadline so that experts work on your questions before the deadline
Customer: replied 4 years ago.
I need help with this question by Wednesday 9/21/11
Expert:  F. Naz replied 4 years ago.
Do you need the answers of questions with calculation or also you need the report. thanks.
Customer: replied 4 years ago.
I need help with both plese
Customer: replied 4 years ago.
I promise to give a tip if you can help me with this question by Friday 9/23/11
Expert:  F. Naz replied 4 years ago.
Okay I will my best to give the answer by Friday.
Customer: replied 4 years ago.
Thank you soooo much!
Expert:  F. Naz replied 4 years ago.
Please check your data once more as some of them are given on yearly basis while some of them on monthly basis, also recheck selling price. thanks.
Customer: replied 4 years ago.
Assistance is no longer needed for this question
Expert:  F. Naz replied 4 years ago.

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