Alpine Inc. has been experiencing losses for some time as shown by its most recent income statement: ALPINE INC. Income Statement For the year ended June 30 2012 Sales (40 000 Units at $12) $480 000 Less: Cost of Goods Sold Direct Materials $120 000 Direct Labor 65 600 Manufacturing Overhead 90 000 275 600 Gross Margin 204 400 Less: Operating expenses: Selling expenses: Variable: Sales Commissions $38 400 Shipping 14 000 52 400 Fixed (Advertising salaries) 110 000 Administrative expenses: Variable (billing other) 3 200 Fixed (salaries other) 85 000 250 600 Net Loss $(46 200) All variable expenses in the company vary in terms of units sold except for sales commissions which are based on sales dollars. Variable manufacturing overhead is 50 cents per unit. The companys plant has a capacity of 70 000 units. Management is particularly disappointed with 2012s operating results. Several possible courses of action are being studied to determine what should be done to make 2013 profitable. 1. Redo Alpine Inc.s 2012 Income Statement in the contribution format. Show both a total column and a per unit column on your statement 2. Refer to the data. Micah Patdu the president thinks it would be unwise to change the selling price. Instead she wants to use less costly materials in manufacturing units of product thereby reducing costs by $1.73 per unit. How many units would have to be sold during 2013 to earn a target profit of $59 000 for the year?
