1. ThThe New Mill Manufacturing Company produces the following three products: S
ID: 2381624 • Letter: 1
Question
1. ThThe New Mill Manufacturing Company produces the following three products:
Saws
Knives
Measuring Tapes
Entire Company
Sales in Units
50 Units
30 Units
20 Units
100 units
Sales Price per unit
$40.00
$16.00
$50.00
Variable Cost per unit
$28.00
$12.00
$30.00
Fixed Costs
$76,000
Calculate the following values:
a. Break-even point in units for the entire Company
b. Number of Saws that will be sold at break-even
c. Total sales in dollars for the entire Company to obtain a before-tax profit of $19,000
Saws
Knives
Measuring Tapes
Entire Company
Sales in Units
50 Units
30 Units
20 Units
100 units
Sales Price per unit
$40.00
$16.00
$50.00
Variable Cost per unit
$28.00
$12.00
$30.00
Fixed Costs
$76,000
ThThe New Mill Manufacturing Company produces the following three products: Calculate the following values: Break-even point in units for the entire Company Number of Saws that will be sold at break-even Total sales in dollars for the entire Company to obtain a before-tax profit of $19,000Explanation / Answer
a. Let total units at breakeven be X
So no of units of saws = X*0.5, knives = X*0.3, measuring tapes = X*0.2
Contribution/unit for saws = 40-28=12, for knives = 16-12=4, for measuring tapes = 50-30=20
So total contribution = (X*0.5)*12 + (X*0.3)*4 + (X*0.2)*20 = 6X+1.2X+4X = 11.2X
At breakeven, contribution = fixed cost
So 11.2X = 76,000, which means X=6785.71
Answer is: Breakeven units = 6785.71
b. No of saws at breakeven = 6785.71*0.5 = 3392.86
c. Contribution margin ratio = (12+4+20)/(40+16+50) = 33.96%
Contribution = fixed cost + profit = 76,000+19,000 = 95,000
Sales = contribution / contribution margin ratio = 95,000 / 33.96% = $ 279,722
Hope this helped ! Let me know in case of any queries.
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