Discussion Post: Managerial Accounting
Belli-Pitt, Inc, produces a single product. The results of the company's operations for a typical month are summarized in contribution format as follows:
Sales ...................................$540,000
Variable expenses ..............360,000
Contribution margin ..........180,000
Fixed expenses ..................120,000
Net operating income ........$ 60,000
The company produced and sold 120,000 kilograms of product during the month. There were no beginning or ending inventories.
Required:
• Given the present situation, compute
o The break-even sales in kilograms.
o The break-even sales in dollars.
o The sales in kilograms that would be required to produce net operating income of $90,000.
o The margin of safety in dollars.
• An important part of processing is performed by a machine that is currently being leased for $20,000 per month. Belli-Pitt has been offered an arrangement whereby it would pay $0.10 royalty per kilogram processed by the machine rather than the monthly lease.
o Should the company choose the lease or the royalty plan?
o Under the royalty plan compute break-even point in kilograms.
o Under the royalty plan compute break-even point in dollars.
o Under the royalty plan determine the sales in kilograms that would be required to produce net operating income of $90,000.
The response must include a reference list. Using Times New Roman 12 pnt font, double-space, one-inch margins, and APA style of writing and citations.