Horngren 13th Edition Chapter 3 Problem 3-49

Peoria Moline

Selling price $150.00 $150.00

Variable manufacturing cost per unit $72.00 $88.00

Fixed manufacturing cost per unit 30.00 15.00

Variable marketing and distribution cost per unit 14.00 14.00

Fixed marketing and distribution cost per unit 19.00 14.50

Total cost per unit 135.00 131.50

Operating income per unit $ 15.00 $ 18.50

Production rate per day 400 units 320 units

Normal annual capacity usage 240 days 240 days

Maximum annual capacity 300 days 300 days

1. Calculate the breakeven point in units for the Peoria plant and for the Moline plant.

Selling price $150.00 $150.00

Variable manufacturing cost per unit $72.00 $88.00

Variable marketing and distribution cost per unit 14.00 $86.00 14.00 $102.00

Contribution margin per unit (CMU) $64.00 $48.00

0

Fixed manufacturing cost per unit 30.00 15.00

Fixed marketing and distribution cost per unit 19.00 49.00 14.50 29.50

Operating income per unit $ 15.00 $ 18.50

Manufacturing costs of additional units (overtime) ($3) $61.00 ($8) $40.00

Peoria Moline

Annual Fixed Costs $4,704,000.00 $2,265,600.00

Breakeven Volume = FC/CMU normal production Units 73,500 Units 47,200

2. Calculate the operating income that would result from the production manager's plan to product 96,000 units at each plant.

Peoria Moline

Units Produced and Sold 96,000 96,000

Normal Volume 96,000 76,800

Overtime 0 19,200

CMU Normal $6,144,000 $3,686,400

CMU Overtime $- $768,000

Total CMU $6,144,000 $4,454,400

Total Fixed Costs $4,704,000 $2,265,600

Operating Income $1,440,000 $2,188,800...