Preston Company Is Analyzing Two Alternative Methods of Producing Its

question 26

Essay

Preston Company is analyzing two alternative methods of producing its product. The production manager indicates that variable costs can be reduced 40% by installing a machine that automates production, but fixed costs would increase. Alternative 1 shows costs before installing the machine; Alternative 2 shows costs after the machine is installed. (a) Compute the break-even point in units and dollars for both alternatives. (b) Prepare a forecasted income statement for both alternatives assuming that 30,000 units will be sold. The statements should report sales, total variable costs, contribution margin, fixed costs, income before taxes, income taxes, and net income. Below the income statement, compute the degree of operating leverage. Which alternative would you recommend and why?

Discern the nuances between policies, rules, and different planning types.

Recognize the tools and methodologies employed in the planning process, including budgeting and scheduling.

Understand the concept and application of management by objectives in organizational settings.

Recognize the significance and process of creating action plans within organizations.

---

Definitions:

Interview Anxiety

The fear, tension, or distress people experience before or during a job interview, often affecting their performance.

Ideal Self

A person’s conception of themselves in terms of attributes or abilities they aspire to possess.

Self-Efficacy

An individual's belief in their own capability to complete tasks and reach goals.

Self-Help Books

Publications designed to offer guidance on personal improvement and to address personal challenges.