AccuMeter manufactures and sells its only product (Zl) in lot

AccuMeter manufactures and sells its only product (Zl) in lot sizes of 500 units. Because of this approach, lot (batch)-level costs are regarded as variable for CYP analysis. Presented is sales and cost information for the year 2009:

Sales revenue (50,000 units at $40) …………………….. $2,000,000
Direct materials (50,000 units at $10) …………………... 500,000
Processing (50,000 units at $15) …………………..……. 750,000
Setup (100 lots at $2,000) ………………………………. 200,000
Batch movement (100 lots at $400) ……………………... 40,000
Order filling (100 lots at $200) ………………………….. 20,000
Fixed factory overhead …………………………………... 800,000
Fixed selling and administrative …………………………. 300,000

Required
a. Prepare a traditional contribution income statement in good form.
b. Prepare a multi-level contribution income statement in good form.
c. What is the current contribution per lot (batch) of 500 units?
d. Management is contemplating introducing a limited number of specialty products. One product would sell for $60 per unit and have direct materials costs of $12 per unit. All other costs and all production and sales procedures will remain unchanged. What lot (batch) size is required for a contribution of $700 per lot?



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