how can the changes below affect Mirabel’s overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only
how can the changes below affect Mirabel’s overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only the company’s break-even point, but also the desired margin of safety. If Mirabel purchases the new equipment for $1,200,000, it will increase fixed costs by 10% but will decrease the variable cost per unit for all 3 models by 5%. If Mirabel invests the additional $650,000 in fixed marketing expenses, sales of the Model 301 are expected to increase by 8%. If the projection is that sales will increase by 10% in the coming year. The sales volume remains fixed but there is a 5% increase in variable expenses (materials cost) for the Model 101 and 301, and a 10% increase in variable expenses for Model 201. Transcribed Image Text: Mirabel Manufacturing
Budgeted Income Statement
For the Year Ending December 31
Cost of goods sold:
Selling & Administrative
Fixed Marketing Expenses
Net Operating Income
Normal Annual Sales Volume
Unit Selling Price
Variable expense per unit
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