Bill French

In: Business and Management

Submitted By monicaf
Words 819
Pages 4
Changes on Planning Production after recomendations that were suggested on the metting:

1) To begin I want to list the assumptions that I considered aggregated information of the three product lines: a) Sales Assumption: Assume sales prices and quanties (sales mix) per each product as invarible and b) Costs Assumptions: Assume variable cost and fixed cost remain the same por each product line, the same prime costs for variable costs and the same plant capacity for fixed cost.
2) After I review the information provided for you the next year will look like:
a) Break-even point: Sales – Variable Cost – Fixed Cost = Net Income 0
Production Weight * X * A Unit Contribution Margin + B Production Weight * x * B Unit Contribution Margin + C Production Weight * X* C Unit Contribution Margin – Total Fixed Costs =0
0.22* X* ($0.42) +0.25*X*($0.88)+ 0.53*X*($0.55)-$640,000=0
$0.09*x+$0.22*X+$0.29*X-$640,000=0
$0.602*X =$640,000
X=($640,000/0.602) = 1,062,486 Units
BEP in Sales = BEP in Units* Aggregate Units Sales Prices
BEP in Sales = 1,062,486 units * 1.17US$/Units
BEP in Sales = $1,241,337

b) The level of operations that the company must to achieved to pay the extra dividend
Ignoring union demands. Consider that the net income will be US$200,000 composed by: US$50,000 tostockholers, US$25,000 hold for business, dividend extra US$25,000 and extra US$50,000 to hit $100,000 after the cost of beign governed.
Sales – Variable Cost – Fixed Cost = Net Income
$0.09*x+$0.22*X+$0.29*X-$640,000=$200,000
$0.602*X = $840,000 X =1,395,348 units.

c) The level of operations mus to be achieved to meet the union demands, ignoring bonnus dividends.That means increased the variable cost per unit in 10%. Production Weight * X * A Unit Contribution Margin + B Production Weight * x * B Unit Contribution Margin + C…...

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