Morgan Designs Manufactures Decorative Iron Railings Required:
Compute the Following Items:
A

question 59

Essay

Morgan Designs manufactures decorative iron railings. In preparing for next year's operations, management has developed the following estimates:
$\begin{array}{lrrr}&\text { Total}&\text { Per Unit}\\ \text { Sales (20,000 units) } & \$ 1,000,000 & \$ 50.00 \\\text { Direct materials } & \$ 200,000 & \$ 10.00 \\\text { Direct labor (variable) } & \$ 50,000 & \$ 2.50\\\text { Manufacturing overhead: } & & & \\\text { Variable } & \$ 70,000 & \$ 3.50 \\\text { Fixed } & \$ 80,000 & \$ 4.00 \\\text { Selling \& administrative: } & & & & \\\text { Variable } & \$ 100,000 & \$ 5.00 \\\text { Fixed } & \$ 30,000 & \$ 1.50\end{array}$

Required:
Compute the following items:
a. Unit contribution margin.
b. Contribution margin ratio.
c. Break-even in dollar sales.
d. Margin of safety percentage.
e. If the sales volume increases by 20%, with no change in total fixed costs, what will be the change in operating profit?
f. If the per unit variable production costs increase by 15%, and fixed selling and administrative costs increase by 12%, what will be the new break-even point in dollar sales?

Analyze the impact of taxes on a firm's cost of capital and overall financial decisions.

Understand and apply the Modigliani and Miller Propositions I and II within the context of corporate finance.

Evaluate the effects of leverage on return on equity (ROE) and the risk-return trade-off for shareholders.

Calculate and analyze the weighted average cost of capital (WACC) and its components.

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Definitions:

Gene Frequencies

The relative proportions of different alleles of a particular gene in a given population, important in the study of genetics and evolution.

Experiences

Events or occurrences that leave an impression on someone, contributing to their knowledge or understanding.

Interaction

The reciprocal action or influence between entities, leading to a continuous process of engagement and response.

Human Chromosome

A thread-like structure of nucleic acids and protein found in the nucleus of most living cells, carrying genetic information in the form of genes.