1.Using a Computer Spreadsheet to Solve Multiple-Product Break-Even: Varying Sales Mix

More-Power Company has projected sales of 75,000 regular sanders and 30,000 mini-sanders for next year. The projected income statement is as follows:

		Regular Sander		Mini-Sander		Total
Sales		$3,000,000		$1,800,000		$4,800,000
Less: Variable expenses		1,800,000		900,000		2,700,000
Contribution margin		$1,200,000		$900,000		$2,100,000
Less: Direct fixed expenses		250,000		450,000		700,000
Product margin		$950,000		$450,000		$1,400,000
Less: Common fixed expenses						600,000
Operating income						$800,000

Required:

1.For each of the following possible sales mixes, calculate operating income:

Regular Sander	Mini-Sander
a.	75,000	37,500
b.	60,000	60,000
c.	30,000	90,000
d.	30,000	60,000

	Operating Income
a.	$__________
b.	$__________
c.	$_____________
d.	$__________

2.Calculate the break-even units for each product for each of the preceding sales mixes. Round the number of break-even packages to two decimal places (and use this figure for intermediate calculations). Round the number of break-even regular and mini-sanders to the nearest whole unit.

	a	b	c	d
Break-even packages
Break-even regular sanders
Break-even mini-sanders

2. Break-Even Units and Sales Revenue: Margin of Safety

Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 2,990,000 pages at a price of $0.08 each in the coming year. Product costs include:

Direct materials	$0.012
Direct labor	$0.004
Variable overhead	$0.002
Total fixed overhead	$137,360

There is no variable selling expense; fixed selling and administrative expenses total $35,000.

In your computations that involve the contribution margin ratio, do not round the ratio.

1.Calculate the break-even point in units. ___________

2.Calculate the break-even point in sales revenue. $___________

3.Calculate the margin of safety in units for the coming year. ___________

4.Calculate the margin of safety in sales revenue for the coming year. $___________

5.What if the total selling and administrative expenses are reduced to $14,540? Recalculate the following:

a. Break-even point in units	___________	units
b. Break-even point in sales revenue	$___________
c. Margin of safety in units for the coming year	___________	units
d. Margin of safety in sales revenue for the coming year	$___________