6.5 Smith Company can produce two types of carpet cleaners, Brighter and Cleaner
ID: 2516020 • Letter: 6
Question
6.5
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows:
The number of machine-hours to produce one unit of Brighter is 1 while the number of machine-hours for each unit of Cleaner is 2. Total fixed costs for the manufacture of both products are $264,000.
Using a spreadsheet, determine the breakeven point in total units for Smith Company, assuming that the sales mix (based on physical volume) remains constant. (Round "Sales mix (based on units)" and "Weighted average contribution margin/unit" to 2 decimal places. Round your final answer for "Total units to breakeven" up to the nearest whole unit.)
At this breakeven level, how many of each product are envisioned? Due to rounding, the total breakeven units for Requirement 2 may differ slightly than in Requirement 1. (Round "Sales mix" to 2 decimal places. Round your final answers for "Breakdown" up to the nearest whole unit.)
Using the Indirect approach, what is the overall breakeven point in sales dollars? Use the breakeven units computed in Requirement 1. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.)
6.5
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows:
Brighter Cleaner Contribution margin/unit Sales mix (based on units) Wtd.-avg. cm per unit Total fixed costs to be recovered + Weighted-average cm/unit Total units to breakevenExplanation / Answer
Answer
Brighter
Cleaner
Contribution margin / unit
$450 [750-300]
$550 [1000-450]
Sales mix (based on units)
400 [40%] or 0.4
600 [60%] or 0.6
Weighted Avg CM per unit
$180 [450x0.4]
$330 [550x0.6]
$510
Total Fixed costs to be recovered
$264,000
Weighted Avg CM per unit
$510
Total Units to break Even
518 units
Brighter
Cleaner
Sales Mix
40% or 0.40
60% or 0.60
Break Down
207 units [518 x 0.4]
311 units [518 x 0.6]
Total Units to break Even
518 units
Brighter Sales Dollars
$155,400 [518 x 40% x $400]
Cleaner Sales Dollar
$310,800 [518 x 60% x $1000]
Overall Break Even in Dollars
$466,200
Brighter
Cleaner
Contribution margin / unit
$450 [750-300]
$550 [1000-450]
Sales mix (based on units)
400 [40%] or 0.4
600 [60%] or 0.6
Weighted Avg CM per unit
$180 [450x0.4]
$330 [550x0.6]
$510
Total Fixed costs to be recovered
$264,000
Weighted Avg CM per unit
$510
Total Units to break Even
518 units
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.