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1.The company is considering making a deluxe model. Its price would be $156, and its VC per unit would be $100, compared to a price
1.The company is considering making a deluxe model. Its price would be $156, and its VC per unit would be $100, compared to a price of $100 and a VC of $60 for the basic model. It anticipates a sales mix of 60% basic model and 40% deluxe model. How many units of the basic model and how many units of the deluxe model must the company sell to break even?
| Exhibit 4 | |||
| Unit Produced and Sold | |||
| Cost Category | 1200 | 1900 | |
| Direct Material | $ 36,000.00 | $ 57,000.00 | |
| Direct Labor | $ 18,000.00 | $ 28,500.00 | |
| Rent | $ 5,000.00 | $ 5,000.00 | |
| Depreciation | $ 4,000.00 | $ 4,000.00 | |
| Electricity | $ 4,400.00 | $ 5,800.00 | |
| Other Manufacturing | $ 19,600.00 | $ 21,700.00 | |
| Selling | $ 8,000.00 | $ 8,000.00 | |
| Sales Commision | $ 12,000.00 | $ 19,000.00 | |
| Administration | $ 5,000.00 | $ 5,000.00 | |
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