Question
(12 pts) 7. Garcia Sports, Inc., produces high-quality sports equipment. The company's Golf Division manufactures three lines of golf clubsthe Standard, the Deluxe, and the
(12 pts) 7. Garcia Sports, Inc., produces high-quality sports equipment. The company's Golf Division manufactures three lines of golf clubsthe Standard, the Deluxe, and the Prothat are widely used in amateur play. Selected information on the golf clubs is given below:
Standard Deluxe Pro
Selling price per set $200.00 $400.00 $600.00
Variable expenses per set:
Production $100.00 $250.00 $350.00
Selling (5% of selling price) $ 10.00 $ 20.00 $ 30.00
All sales are made through the company's own retail outlets.The Golf Division has the following monthly fixed costs:
Fixed production costs $200,000
Advertising expense 125,000
Administrative salaries 275,000
Total $600,000
Sales of the three golf club sets are in the proportion of 5 to 3 to 2, Standard, Deluxe, and Pro, respectively.
Required:
- Determine the breakeven point in units for each of the three golf club sets.
- Determine the operating income if a total of 60,000 golf club sets are sold in the sales mix proportion.
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