Crown Co. can produce two types of lamps, the Enlightner and Foglighter. The dat

Question

Crown Co. can produce two types of lamps, the Enlightner and Foglighter. The data on the two lamp models are as follows Sales volume in units Unit sales price Unit variable cost Unit contribution margin Enlightner 500 $290.00 $200.00 $90.00 Foglighter 390 $400.00 $235.00 $165.00 It takes one machine hour to produce each product. Total fixed costs for the manufacture of both products are $89,000. Demand is high enough for either product to keep the plant operatingat maximum capacity Assuming that sales mix remains constant in dollars, what is the breakeven point in dollars? (Round intermediate calculations to 4 decimal places and final answer up to the nearest whole number) $232,735 $257,233 $269,482 $244,984 $220,486

Explanation / Answer

Break even point in units for multi product organization

= Fixed costs / Weighted average contribution margin

= $89,000 / Row D total

= $89,000 / $123

= 724.37 units

So, as per above calculations, $ 244,984 is the break even point in dollars and option D is the correct option

Calculations Particulars Enlightner Foglighter Total A Sales volume in units                   500                  390            890 B = A / 890 Sales Mix 56.18% 43.82% C Unit contribution margin 90 165 D = B x C Weighted average contribution 50.5620 72.3030            123 E = 724.37 x B Allocated units for each product             406.95            317.42 F Unit Sales price 290 400 G = E x F Total Sales Value     118,016.18    126,967.97    244,984

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