18) Venkat Company has provided the following information regarding the two prod
ID: 2415340 • Letter: 1
Question
18) Venkat Company has provided the following information regarding the two products that it sells:
Jet Boats
Ski Boats
Sales price per unit
$8,000
$20,000
Variable cost per unit
$4,800
$14,000
Annual fixed costs are $280,000.
How many units must be sold in order for Venkat to breakeven, assuming that Venkat sells five jet boats for every two ski boats sold?
A) 70 jet boats and 28 ski boats
B) 50 jet boats and 20 ski boats
C) 20 jet boats and 50 ski boats
D) 45 jet boats and 28 ski boats
Note: Supporting computations are required for this problem. Failure to do so will result in loss of points.
19) White Marsh Company has prepared the following sales budget:
Month
Budgeted Sales
March
$200,000
April
180,000
May
220,000
June
260,000
Cost of goods sold is budgeted at 60% of sales and the inventory at the end of February was $36,000. Desired inventory levels at the end of each month are 20% of the next month's cost of goods sold. What is the desired beginning inventory on June 1?
A) $52,000
B) $26,400
C) $43,200
D) $31,200
Note: Supporting computations are required for this problem. Failure to do so will result in loss of points.
Jet Boats
Ski Boats
Sales price per unit
$8,000
$20,000
Variable cost per unit
$4,800
$14,000
Explanation / Answer
18) Break even point= Total fixed expenses/weighted avg sp-weighted avg variable exp
= 280,000/11367.6-7385.96
=280000/3981.64
=70 units
Weighted avg sp=(8000*71.42%)+(20000*28.27%)
=5713.6+5654
=11367.6
Weighted avg variable exp=(4800*71.42%)+(14000*28.27%)
=3428.16+3957.8
=7385.96
The company will have to sell 70 units to break-even. Now I would compute the number of units of each product to be sold:
Jet boats = 70*71.42% =50 units
Ski boats = 70*28.27% =20 units
Hence,the answer to the question is option b
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