On-the-Go, Inc., produces two models of traveling cases for laptop computers: th
ID: 2332685 • Letter: O
Question
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 $ 50 Expected sales (bags) per year 8,000 12,000 The total fixed costs per year for the company are $661,000. 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.)
Explanation / Answer
Answer a Anticipated level of profit Particulars Amount Sales- Programmer (8000*70) 560000 - Executives (12000*100) 1200000 Less: Variable cost - Programmer (8000*30) 240000 - Executives (12000*50) 600000 Contribution 920000 Less: Fixed cost 661000 Net expected profit 259000 Answer b Break even sales with same product mix = Fixed cost/ Weighted average contribution per unit = 661000/46 14369.56522 or 14370 units total Weighted Contribution= Weighted Selling price- Weighted variable cost = (70*2/5+100*3/5)-(30*2/5+50*3/5) =(28+60)-(12+30) =46 Answer c Break even sales with same product mix = Fixed cost/ Weighted average contribution per unit = 661000/41 16121.95122 or 16122 Weighted Contribution= Weighted Selling price- Weighted variable cost = (70*9/10+100*1/10)-(30*9/10+50*1/10) =(63+10)-(27+5) =41
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.