On-the-Go, Inc., produces two models of traveling cases for laptop computers: the Programmer and the Executive. The bags have the following characteristics:
Programmer Executive Selling price per bag $ 70 $ 100 Variable cost per bag $ 30 $ 40 Expected sales (bags) per year 7,000 10,500
The total fixed costs per year for the company are $674,000.
Required:
a. What is the anticipated level of profits for the expected sales volumes?
b. Assuming that the product mix is the same at the break-even point, compute the break-even point. (Round your final answer up to the nearest whole unit.)
c. If the product sales mix were to change to nine Programmer-style bags for each Executive-style bag, what would be the new break-even volume for On-the-Go? (Round your final answer up to the nearest whole unit.)
On-the-Go, Inc., produces two models of traveling cases for laptop computers: the Programmer and the Executive. The bags have the following characteristics:
| Programmer | Executive | |||||
| Selling price per bag | $ | 70 | $ | 100 | ||
| Variable cost per bag | $ | 30 | $ | 40 | ||
| Expected sales (bags) per year | 7,000 | 10,500 | ||||
The total fixed costs per year for the company are $674,000.
Required:
a. What is the anticipated level of profits for the expected sales volumes?
b. Assuming that the product mix is the same at the break-even point, compute the break-even point. (Round your final answer up to the nearest whole unit.)
c. If the product sales mix were to change to nine Programmer-style bags for each Executive-style bag, what would be the new break-even volume for On-the-Go? (Round your final answer up to the nearest whole unit.)
Related questions
Sales Mix and Break-Even Analysis
Heyden Company has fixed costs of $1,179,900. The unit sellingprice, variable cost per unit, and contribution margin per unit forthe company's two products are provided below.
| Product | Selling Price | Variable Cost per Unit | Contribution Margin per Unit | ||||||
| Q | $360 | $140 | $220 | ||||||
| Z | 270 | 150 | 120 | ||||||
The sales mix for products Q and Z is 70% and 30%, respectively.Determine the break-even point in units of Q and Z. If required,round your answers to the nearest whole number.
a. Product Q units
b. Product Z units
Lindon Company is the exclusive distributor for an automotiveproduct that sells for $35.00 per unit and has a CM ratio of 31%.The companyâs fixed expenses are $249,550 per year. The companyplans to sell 24,000 units this year. |
Required:
| 1. | What are the variable expenses per unit? (Round youranswer to 2 decimal places.) | ||
| 2. | Use the equation method: |
| a. | What is the break-even point in unit sales and in dollar sales?(Do not round intermediate calculations.) |
| b. | What amount of unit sales and dollar sales is required to earnan annual profit of $54,250? (Do not round intermediatecalculations.) |
| c. | Assume that by using a more efficient shipper, the company isable to reduce its variable expenses by $3.60 per unit. What is thecompanyâs new break-even point in unit sales and in dollar sales?(Do not round intermediate calculations. Round up breakeven point answers to the nearest whole number.) |
| 3. | Repeat (2) above using the formulamethod. |
| a. | What is the break-even point in unit sales and in dollar sales?(Do not round intermediate calculations.) |
| b. | What amount of unit sales and dollar sales is required to earnan annual profit of $54,250? (Do not round intermediatecalculations.) |
| c. | Assume that by using a more efficient shipper, the company isable to reduce its variable expenses by $3.60 per unit. What is thecompanyâs new break-even point in unit sales and in dollar sales?(Do not round intermediate calculations. Round up breakeven point answers to the nearest whole number.) |
