The Lakeside Boatworks is planning to manafacture three types of molded fiber gl

Question

The Lakeside Boatworks is planning to manafacture three types of molded fiber glass recreational boats-a fishing (bass) boat, a ski boat, and a small speedboat. The estimated selling price and variable cost for each type of boat are summarized in the following table.

Boat Variable Cost Selling Price
Bass $ 12,500 $23,000
Ski $ 8,500 $18,000
Speed $ 13,700 $26,000
The company has incurred fixed costs of $2,800,000 to set up its manufacturing operation.If company plans to produce twice as many fishing boat as ski boat respectively with propotion 2:1:1
1.find number of each type of boat to produce for break even
2.what is break even dollar value

Explanation / Answer

Contribution margin of Bass= 23000-12500= 10500

Contribution margin of Ski= 18000-8500= 9500

Contribution margin of Speed= 26000-13700= 12300

Let number of ski and speed boats = x

number of bass boats= 2x

For breakeven, Profit =0

2x*10500+ x*9500 + x*12300-2800000=0

X= 65.42056

Number of ski and speed boat = 65

Number of bass boat= 131

2. break even dollar value = 23000*131+ 18000*65 + 26000*65=5873000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.