Juan Castorena Company manufactures two models of televisions, Super clear and Ultra clear. Unit data for each model are as follows.

Monthly fixed costs are: manufacturing overhead $80,000; selling expenses $54,000; and administrative expenses $34,000.

Instructions

(a) Compute the contribution margin for each model.

(b) Compute the break-even point in dollars for each model using the contribution margin, assuming fixed costs are divided equally between the products.

(c) Compute the sales necessary to make net income of \($36,000\) on Super clear and \($48,000\) on Ultra clear. Each model incurs 50% of all fixed costs.

Transcribed Image Text:

Superclear Ultraclear Selling price Variable costs and expenses $420 $630 Direct materials 90 125 Direct labor 50 90 Manufacturing overhead 60 100 Selling 32 70 Administrative 20 56 Total variable $252 $441