# Assume that you are part of the accounting team for Koller Manufacturing. The company currently expe

Assume that you are part of the accounting team for Koller Manufacturing. The company currently expects to sell 618 units for total revenue of $21,000 each month. Koller Manufacturing estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $8,500 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below. Koller Manufacting Contribution Margin Income Statement 21,000 Sales Less: Variable costs -10,500 Contribution margin 10,500 Less: Fixed costs -8,500 2,000 Operating income Feedback Check My Work Review the formula and structure of this statement from the first two steps above, and apply these values. Recall that direct labor and direct materials are included with variable costs. Koller Manufacturing is examining cost behavior patterns. Your recommendation is to first determine the break-even point in calculate the contribution margin (CM) per unit (rounded to the nearest dollar). $17.00 units. First, Next, complete the formula below to determine the break-even units. Next Check My Work APPLY THE CONCEPTS: The Profit-Volume Graph A profit-volume graph helps managers to visualize the relationship between profits and units sold. The data for Koller Manufacturing has been used to construct the profit-volume graph below. The purple points (diamond symbols) plot the profit line. The operating loss is the shaded area bordered by the red points (cross symbols). The operating profit is the area bounded by the green points (triangle symbols). Choose the correct profit-volume graph for Koller ManufacturingAV PROFIT IDollars 10000 Oper. Profit Area 7500 Oper. Loss Area 5000 2500 Profit Line -2500 -5000 -7500 -10000 200 400 600 800 1000 Help UNITS OF SALES Clear All A. Next Check My Work APPLY THE CONCEPTS: Effect of Changes to Sales Price, Variable Costs and Fixed Costs Now consider each of the following scenarios for Koller Manufacturing. Calculate the contribution margin (CM) per unit, rounded to nearest dollar, and the new break-even point in units, rounded to the nearest whole unit, for each scenario separately. Scenario 1 Scenario 2 Scenario 3 After some extensive market research, Koller has Koller has been experiencing quality problems with a Koller will dispose of a machine determined that a sales price increase of $2 per materials supplier. Changing suppliers will improve the in the factory. The depreciation unit will not affect the sales volume and will be quality of the product but will cause direct materials costs. to increase by $1 per unit on that equipment is $500 per effective immediately. month CM per unit: $ CM per unit: S CM per unit: $ Break-even units: Break-even units: Break-even units: units units units Feedback Check My Work Feedback Check My Wok Next Check My Work 888 & %