Peppy Quadcopters plans to sell a standard quadcopter (toy drone) for $70 and a

Question

Peppy Quadcopters plans to sell a standard quadcopter (toy drone) for $70 and a deluxe quadcopter for $100. Peppy purchases the standard quadcopter for S60 and the deluxe quadcopter for $75. Management expects to sell two deluxe quadcopters for every three standard quadcopters. The company's monthly fixed expenses are $11,200. How many of each type of quadcopter must Peppy sell monthly to breakeven? To earn $9,600? First identify the formula o compute he sales in units a various levels o operating income using he contribution margin approach. Abbreviations used: Avg. = average, and CM = contribution margin Breakeven sales in units Next compute the weighted-average contibution margin per unit. First identify the formula labels, then complete the calculations step by step. Standard Deluxe Total Deduct Weighted average contribution margin per unit How many of each type of quadcopter must Peppy sell monthly to breakeven? Peppy must sell standard quadcopters anddeluxe quadoopters to breakeven. How many of each type of quadcopter must Peppy sell monthly to earn S9,600? To reach the target operating income, Peppy must sell standard quadcopters and deluxe quad op ers.

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount (Fixed costs + Income)/Weighted average contribution per unit = Break even sales in units Particulars Standard Deluxe Total Selling price per unit                     70.00              100.00 Variable cost per unit                  (60.00)              (75.00) Contribution margin per unit                     10.00                 25.00 No of units                       3.00                   2.00                   5.00 Total contribution                     30.00                 50.00                 80.00 Weighted average contribution margin per unit                 16.00 Fixed expenses        11,200.00 Break even units = 11200/16              700.00 No of units of each product                  420.00              280.00              700.00 Income Desired           9,600.00 Fixed costs        11,200.00 Contribution desired        20,800.00 Weighted average contribution margin per unit                 16.00 No of units = 20800/16                  780.00              520.00           1,300.00

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