Solved by verified expert :Wilson is a wholesale distributor of widgets. The company services groceries, convenience stores, and super stores like Wal-mart. Small but steady growth has been achieved over the past few years while widgetprices have been increasing. The company is formulating its plans for the coming fiscal year. Presented below are the data used to project the current years after tax net income of $264,960.Complete each highlighted item below based on the information provided in the problemPer CaseAverage selling price per case$-Average variable costs:Widget production per caseSelling expense per caseTotal Variable CostsContribution Margin$$$$-$$#DIV/0!Item B#DIV/0!$$$#DIV/0!#DIV/0!Item C#DIV/0!$$$#DIV/0!$-$#DIV/0!$$-Expected annual sales volume in casesAnnual fixed costs $_________Profit before taxTax rateNet Profit$$$$-$#DIV/0!#DIV/0!#DIV/0!$$$$-Manufacturers of widgets have announced that they will increase prices of their products an average 15% in the coming year due to increases in raw materials and labor costs. Wilson expects all other costs will remain at the same rates or levels as the current year. These changes have not been inputted into the information presented above.BE is the point at which total costs = total revenue.a.What is Wilsons break-even point in cases of widgets for the current year?b.What selling price per case must Wilson charge to cover the 15% increase in variable production costs and still maintain the current contribution margin percentage?#DIV/0! F / (Pu – Bu)Formula on page 167-168fixed / (price per unit – vc per unit) You can also take fixed costs/contrib margin per unit #DIV/0! Current Contribution Margin$- New Variable Cost with 15% increase$- Selling Price Required (6.62 / (1 – .4))c.What volume of sales dollars must Wilson achieve in the coming year to maintain the same net income after taxes as projected for the current year if the selling price of widgets remains at $9.60 per case and the variable production costs of widgets increase 15%?Use the CVP formula on page 167.N = Pu – (F + Bu)Use the steps listed and provide the algebraic equationsto solve for "u"Step 1. Determine current Contrib Margin %Step 2: What is new total variable cost at 15% increaseStep 3: Determine New Selling PrinceStep 4: Verify your answer see B aboveStep 1. Get formula from text on page 167Step 2: Determine Target NI before taxes (because tax rates are same)Step 3: Complete formula by entering known variablesStep 4: Simplify like terms – remember algebra!!Step 5: Solve for unknown variable (u)Step 6: Verify your answer – See C aboveIf demand is greater than supply (due to limited space, equipment, materials, employees, contractors, etc), the scarce resource is called the LF (limited factor). To maximize profit a company must chose the correct product (or service) mix. By determining the correct mix of product, you can maximize your profit absent constraints or bottlenecks.Step 1: Determine CM per unitStep 2: Estimate sales demand per unitStep 3: Determine Total LF usageStep 4: Rank the Limiting FactorStep 5: Determine the number of parts to produce of each item.PoundsSalary40,000National Insurance0.114,400Pension0.062,400Total employment cost46,800working weeks per person46Cost per weekChargeable Hours per weekHourly rate52-4-2251,01740.70P12-1 with changes per the HW problem.PoundsSalaryNational InsurancePensionTotal employment costworking weeks per personCost per weekChargeable Hours per weekHourly rate
