What would be its operating profit for the year

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Reference no: EM13535016

In the table scenario Company X manufactured 120,000 units during the year, which caused its inventory to increase 10,000 units. Suppose, instead, that the company had manufactured 150,000 units during the year, which is its production capacity. Assume sales and other factors were the same in this alternative scenario as shown in table - only production output is different. What would be its operating profit for the year if it had produced 150,000 units?

 

Company X

 
 

Per Unit

Totals

Operating Profit Report for Year

   

Sales volume, in Units

 

110,000

Sales Revenue

$1,400.00

$154,000,000

Cost of Goods Sold Expense (see below)

-760

-83,600,000

Gross Margin

$640.00

$70,400,000

Variable Operating Expenses

-300

-33,000,000

Contribution Margin

$340.00

$37,400,000

Fixed Operating Expenses

 

-21,450,000

Operating Profit

 

$15,950,000

Manufacturing Activity Summary for Year

Per Unit

Totals

Annual Production Capacity, in Units

 

150,000

Actual Output, in Units

 

120,000

Raw Materials

$215.00

$25,800,000

Direct Labor

125

15,000,000

Variable Manufacturing Overhead Costs

70

8,400,000

Total Variable Manufacturing Costs

$410.00

$49,200,000

Fixed Manufacturing Overhead Costs

350

42,000,000

Product Cost and Total Manufacturing Costs

$760.00

$91,200,000

 

Reference no: EM13535016

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