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Sales Variable costs Fixed costs Operating income before taxes Income taxes (45%) Operating income $915,000 $2,287,500 366,000 1,281,000 1,006,500 452,925 $553,575 In an attempt to improve its product, Wildhorse is considering replacing a component part in its product that has a cost of $5 per unit with a new and better part costing $10 per unit during the coming year. A new machine would also be needed to increase plant capacity. The machine would cost $109,800, with a useful life of six years and no salvage value. The company uses straight-line depreciation on all plant assets. What was Wildhorse's break-even point in units last year? Break-even point units How many units of product would Wildhorse have had to sell in the past year to earn $301,950 in operating income after taxes? Sales to be made units Question Part Score If it holds the sales price constant and makes the suggested changes, how many units of product must the company sell in the coming year to break even? Break-even Question Part Score units If it holds the sales price constant and makes the suggested changes, how many units of product will Wildhorse have to sell to make the same operating income before taxes as last year? Required sales units If Wildhorse wishes to maintain the same contribution margin ratio, what selling price per unit of product must it charge next year to cover the increased materials costs? (Round answer to 2 decimal places, e.g. 15.25.) Selling price per unit $

Sales Variable costs Fixed costs Operating income before taxes Income taxes (45%) Operating income $915,000 $2,287,500 366,000 1,281,000 1,006,500 452,925 $553,575 In an attempt to improve its product, Wildhorse is considering replacing a component part in its product that has a cost of $5 per unit with a new and better part costing $10 per unit during the coming year. A new machine would also be needed to increase plant capacity. The machine would cost $109,800, with a useful life of six years and no salvage value. The company uses straight-line depreciation on all plant assets. What was Wildhorse's break-even point in units last year? Break-even point units How many units of product would Wildhorse have had to sell in the past year to earn $301,950 in operating income after taxes? Sales to be made units Question Part Score If it holds the sales price constant and makes the suggested changes, how many units of product must the company sell in the coming year to break even? Break-even Question Part Score units If it holds the sales price constant and makes the suggested changes, how many units of product will Wildhorse have to sell to make the same operating income before taxes as last year? Required sales units If Wildhorse wishes to maintain the same contribution margin ratio, what selling price per unit of product must it charge next year to cover the increased materials costs? (Round answer to 2 decimal places, e.g. 15.25.) Selling price per unit $

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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Wildhorse Company produces a single product. It sold 91.500 units last year with the following results: Sales Variable costs $2,287,500 $915,000 Fixed costs 366,000 1,281,000 Operating income before taxes 1,006,500 Income taxes (45%) 452,925 Operating income $553,575 In an attempt to improve its product, Wildhorse is considering replacing a component part in its product that has a cost of $5 per unit with a new and better part costing $10 per unit during the coming year. A new machine would also be needed to increase plant capacity. The machine would cost $109,800, with a useful life of six years and no salvage value. The company uses straight-line depreciation on all plant assets. What was Wildhorse's break-even point in units last year? Break-even point units How many units of product would Wildhorse have had to sell in the past year to earn $301,950 in operating income after taxes? Sales to be made Question Part Score units If it holds the sales price constant and makes the suggested changes, how many units of product must the company sell in the coming year to break even? Break-even Question Part Score units If it holds the sales price constant and makes the suggested changes, how many units of product will Wildhorse have to sell to make the same operating income before taxes as last year? Required sales units If Wildhorse wishes to maintain the same contribution margin ratio, what selling price per unit of product must it charge next year to cover the increased materials costs? (Round answer to 2 decimal places, e.g. 15.25.) Selling price per unit $
Transcribed Image Text:Wildhorse Company produces a single product. It sold 91.500 units last year with the following results: Sales Variable costs $2,287,500 $915,000 Fixed costs 366,000 1,281,000 Operating income before taxes 1,006,500 Income taxes (45%) 452,925 Operating income $553,575 In an attempt to improve its product, Wildhorse is considering replacing a component part in its product that has a cost of $5 per unit with a new and better part costing $10 per unit during the coming year. A new machine would also be needed to increase plant capacity. The machine would cost $109,800, with a useful life of six years and no salvage value. The company uses straight-line depreciation on all plant assets. What was Wildhorse's break-even point in units last year? Break-even point units How many units of product would Wildhorse have had to sell in the past year to earn $301,950 in operating income after taxes? Sales to be made Question Part Score units If it holds the sales price constant and makes the suggested changes, how many units of product must the company sell in the coming year to break even? Break-even Question Part Score units If it holds the sales price constant and makes the suggested changes, how many units of product will Wildhorse have to sell to make the same operating income before taxes as last year? Required sales units If Wildhorse wishes to maintain the same contribution margin ratio, what selling price per unit of product must it charge next year to cover the increased materials costs? (Round answer to 2 decimal places, e.g. 15.25.) Selling price per unit $
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Question Part Score If it holds the sales price constant and makes the suggested changes, how many units of product will Wildhorse have to sell to make the same operating Income before taxes as last year? Required sales units If Wildhorse wishes to maintain the same contribution margin ratio, what selling price per unit of product must it charge next year to cover the increased materials costs? (Round answer to 2 decimal places, e.g. 15.25) Selling price per unit $
Transcribed Image Text:Question Part Score If it holds the sales price constant and makes the suggested changes, how many units of product will Wildhorse have to sell to make the same operating Income before taxes as last year? Required sales units If Wildhorse wishes to maintain the same contribution margin ratio, what selling price per unit of product must it charge next year to cover the increased materials costs? (Round answer to 2 decimal places, e.g. 15.25) Selling price per unit $
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