Cherry Blossom Products Inc. produces and sells yoga-training products: how-to D

Question

Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 18,200 DVDs and 4,550 equipment sets. Information on the two products is as follows:

Total fixed cost is $84,150.

Compute the break-even quantity of each product.

1. What is the sales mix of DVDs and equipment sets?

Select

2. Compute the break-even quantity of each product.

The break-even quantity for DVDs is .

The break-even quantity for equipment sets is .

Explanation / Answer

1) Calculation of sales mix: Total number of products=18200+4550=22750 DVDs= 18200/22750*100=80% Equipment sets=4550/22750*100=20% Sales mix= DVDs: Equipment sets= 80:20 2) Calculation of break even quantity of each product: Contribution per unit= Selling price- variable cost per unit DVDs= 7.60-3.60=$4 Equipment sets=24.60-15.10=$9.50 Total contribution per unit=4*0.80+9.50*0.20=$5.10 Break even point= Fixed cost/ contribution per unit                                    = 84150/5.10=16500 Break-even quantity for DVDs= 16500*0.80=13200 Break-even quantity for equipment sets=16500*0.20=3300

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