16.5 Vandenberg, Inc., produces and sells two products: a ceiling fan and a tabl

Question

16.5

Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 30,000 ceiling fans and 90,000 table fans in the coming year. Product price and cost information includes:

Common fixed selling and administrative expenses total $80,000.

                                                                 Ceiling Fans                       Table Fans                  Total

Sales

Less: variable expenses

Contribution margin

Less: direct fixed expenses

Product Margin

Less: Common fixed expenses

Operationg income

4. What if Vandenberg, Inc., wanted to earn operating income equal to $14,400? Calculate the number of ceiling fans and table fans that must be sold to earn this level of operating income. (Hint: Remember to form a package of ceiling fans and table fans based on the sales mix and to first calculate the number of packages to earn an operating income of $14,400.) Round your intermediate calculations and final answers to nearest number.

Ceiling Fan Table Fan Price $50   $11   Unit variable cost $11   $4   Direct fixed cost $20,800   $46,000  

Explanation / Answer

Particulars Ceiling Fans Table Fans Total Sales 30000*50 = 1,500,000 90000*11= 990,000 2,490,000 Less : Variable Expenses 30000*11 = 330,000 90000*4 = 360,000 690,000 Contribution 1,170,000 630,000 1,800,000 Less : Direct Fixed Expenses 20,800 46,000 66,800 Product Margin 1,149,200 584,000 1,733,200 Less Common Fixed Expenses 80,000 Operating Income 1,653,200

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