Requirement # 1.

Selling Price
Variable cost
CM/unit

$
$

uniuts to be sold =

120.00
(87.20)
32.80

Fixed Cost plus Target Profit

CM per unit

11,448,000 + 2,000,000
32.8

410,000 units

Proof
Sales
(410,000*120)
Variable Cost
(410,000*87.20)
Contribution Margin
Fixed Cost
Net Operating Income

49,200,000.00
(35,752,000.00)
13,448,000.00
(11,448,000.00)
2,000,000.00

Requirement # 2
CONTACT GLOBAL
Budgeted Income Statement
(Absorption Method)
Sales (410,000 * $ 120.00 per unit)
Less: Cost of goods sold
Beginning Inv.
Cost of goods Manufactured
Goods available for sale
Less: Ending Inventory
Gross Margin
Less: Selling Administrative Expenses
Variable Selling & Admin Exp.
Fixed Selling & Admin
NET OPERATING INCOME

(410,000 * $94.00 per unit)

(410,000*$ 10.00 per unit)

The unit product cost at a production level of 410,000 would be calculated as follows.
Direct Materials
$
Direct Labor
Variable Manufacturing Overhead
Fixed Manufacturing Overhead (6,888,000/410,000 units)
Unit Product Cost
$

38,540,000.00
38,540,000.00
-

38,540,000
10,660,000

4,100,000
4,560,000
$

57.20
15.00
5.00
16.80
94.00

49,200,000.00

8,660,000
2,000,000.00

Requirement #3
A.
Net Income
Add: Selling and Admin Expenses
Variable Selling & Admin Expenses
Fixed Selling & Admin Expenses
GROSS PROFIT
B.
Sales
Less:
Gross Profit
Cost of Goods Sold
units to be sold
COGS per unit
Less:
Direct Materials
Direct Labor
Variable Manufacturing Overhead
Fixed Overhead Costs per unit
units to
be produced

2,000,000.00
4,000,000.00
4,560,000.00

8,560,000.00
$ 10,560,000.00

48,000,000.00
10,560,000.00
37,440,000.00
400,000.00
$
93.60
57.20
15.00
5.00
$

$6,888,000
16.4

420,000 units

77.20
16.40

CONTACT GLOBAL
Budgeted Income Statement
(Absorption Method)
Sales (400,000 units * $120 per unit)
Less: Cost of Goods Sold:
Beginning Inventory
Add: Cost of Goods Manufactured (420,000 units * $93.60)
Goods Available for Sale
Less: Ending Inventory (20,000 * $ 93.60)
Gross Margin
Less: Selling and Administrative Expenses:
Variable Selling and Administrative Expenses(400,000 units * $10 per unit)
Fixed Selling and Administrative Expenses
NET OPERATING INCOME

$ 48,000,000.00
39,312,000.00
39,312,000.00
1,872,000.00

37,440,000.00
10,560,000.00

4,000,000.00
4,560,000.00
$

8,560,000.00
2,000,000.00

Requirement #3
A. Adding back process
Net Income
Add: Selling and Admin Expenses
Variable Selling & Admin Expenses
Fixed Selling & Admin Expenses
GROSS PROFIT
B.
Sales
Less:
Gross Profit
Cost of Goods Sold
units to be sold
COGS per unit
Less:
Direct Materials
Direct Labor
Variable Manufacturing Overhead
Fixed Overhead Costs per unit
units to
be produced

2,000,000.00
4,000,000.00
4,560,000.00

8,560,000.00
$ 10,560,000.00

48,000,000.00
10,560,000.00
37,440,000.00
400,000.00
$
93.60
57.20
15.00
5.00
$

$6,888,000
16.4

420,000 units

77.20
16.40

CONTACT GLOBAL
Budgeted Income Statement
(Absorption Method)
Sales (400,000 units * $120 per unit)
Less: Cost of Goods Sold:
Beginning Inventory
Add: Cost of Goods Manufactured (420,000 units * $93.60)
Goods Available for Sale
Less: Ending Inventory (20,000 * $ 93.60)
Gross Margin
Selling and Administrative Expenses:
Bonuses
Variable Selling and Administrative Expenses(400,000 units * $10 per unit)
Fixed Selling and Administrative Expenses
NET OPERATING INCOME

$ 48,000,000.00
39,312,000.00
39,312,000.00
1,872,000.00

37,440,000.00
10,560,000.00

25,000.00
4,000,000.00
4,560,000.00
$

8,585,000.00
1,975,000.00

Requirement #3
A. Adding back process
Net Income
Add: Selling and Admin Expenses
Variable Selling & Admin Expenses
Fixed Selling & Admin Expenses
GROSS PROFIT

2,000,000.00
4,000,000.00
4,560,000.00

B.
Sales
Less:
Gross Profit
Cost of Goods Sold
units to be sold
COGS per unit
Less:
Direct Materials
Direct Labor
Variable Manufacturing Overhead
Fixed Overhead Costs per unit
units to
be produced

8,560,000.00
$ 10,560,000.00

48,000,000.00
10,560,000.00
37,440,000.00
400,000.00
$
93.60
57.20
15.00
5.00

77.20
16.40

$6,888,000
16.4

420,000 units
CONTACT GLOBAL
Budgeted Income Statement
(Variable Costing)

Sales (400,000 units * $120 per unit)

Less: Variable Costs
Variable Selling and Administrative Expenses
Direct Materials
Direct Labor
Variable Manufacuring Overhead
Gross Margin
Selling and Administrative Expenses:
Bonuses
Fixed Manufacturing Overhead
Fixed Selling and Administrative Expenses
NET OPERATING INCOME

$ 48,000,000.00
4,000,000.00
22,880,000.00
6,000,000.00
2,000,000.00
34,880,000.00
13,120,000.00
25,000.00
6,888,000.00
4,560,000.00
$

11,473,000.00
1,647,000.00