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16-1 Hospital Supply, Inc.

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16-1 Hospital Supply, Inc.
| Costs per Unit for Hydraulic Hoists | | | | Unit Manufacturing Costs | | | | | | | | Variable Materials | | $550 | | | | | | Variable Labor | | | 825 | | | | | | Variable overhead | | 420 | | | | | | Fixed overhead | | | 660 | | | | | | Total unit manufacturing costs | | | $2,455 | | | | | Unit Marketing Costs | | | | | | | | Variable | | | 275 | | | | | | Fixed | | | 770 | | | | | | Total unit marketing costs | | | 1,045 | | | | | Total Unit Costs | | | | $3,500 | | | | | | | | | | | | | | | | | | | | | 1) | What is the break-even volume in units? In sales dollars? | | | | | | | | | | | | | Fixed overhead | 660 | | Sell Price | $4,350 | | | | | Fixed Mktg | 770 | | VC | 2,070 | | | | | | 1,430 | | Cont. Margin | $2,280 | | | | | Normal Volume (units) | 3,000 | | | | | | | | TFC | $4,290,000 | | | | | | | | | | | | | | | | | | | | | | | | | | TFC | $4,290,000 | | BE (units) | 1,882 | | | | | Cont. Margin | 2,280 | | Sell price | $4,350 | | | | | Break-even Units | 1,882 | | Break-even Sales | $8,186,700 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2) | Impact on monthly sales, costs, and income if monthly volume increases to 3,500 units, and selling price is reduced from $4,350 to $3,850 per unit. | | | | | | | | | Current | w/Sell Price Reduction | Variance | | | | | Selling Price | | $4,350 | $3,850 | $(500) | | | | | Volume (in units) | | 3,000 | 3,500 | 500 | | | | | Sales Revenue | | $13,050,000 | $13,475,000 | $425,000 | | | | | Cost of Sales | | | | | | | | | Variable Manufacturing | (5,385,000) | (6,282,500) | (897,500) | | | | | Variable Marketing
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