Symbol Manufacturing Inc. makes component parts for automobile navigation systems. For component A14 direct materials cost $47, and the assembly technicians are paid $42 per hour. A technician can produce two components per hour. Fixed manufacturing costs for A14 are $70,000 per unit based on current production of 12,000 units. Non-manufacturing costs are fixed at $120,000 per period. Each A14 component sells for $195.
Required:
a. Prepare an income statement in gross margin format.
b. Calculate the dollar sales required to generate an operating profit of $1,500,000 and prepare an income statement in contribution margin format.
c. What actions could Symbol Manufacturing Inc. management take to lower the required number of units sold necessary to generate the desired operating profit?

Question

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The Answer of Symbol Manufacturing Inc. makes component parts for automobile navigation systems. For component A14 direct materials cost $47, and the assembly technicians are paid $42 per hour. A technician can produce two components per hour. Fixed manufacturing costs for A14 are $70,000 per unit based on current production of 12,000 units. Non-manufacturing costs are fixed at $120,000 per period. Each A14 component sells for $195.
Required:
a. Prepare an income statement in gross margin format.
b. Calculate the dollar sales required to generate an operating profit of $1,500,000 and prepare an income statement in contribution margin format.
c. What actions could Symbol Manufacturing Inc. management take to lower the required number of units sold necessary to generate the desired operating profit?