Answered step by step
Verified Expert Solution
Question
1 Approved Answer
7-3A - Multi-product CVP Awesome Axes sells electric guitars. The company sells three models of guitar: Enthusiast, Jammer and Pro. Information relating to next year's
7-3A - Multi-product CVP Awesome Axes sells electric guitars. The company sells three models of guitar: Enthusiast, Jammer and Pro. Information relating to next year's budget for the three models follows: Expected sales (units) Sales price Variable cost Enthusiast 6001 $2001 $120 Jammer 350 $500 $200 Pro 50 $3,000 $800 The company has annual fixed costs of $200,000 and a tax rate of 25%. Required: a.) Compute the company's expected profit (net income) for the upcoming fiscal period. b.) Compute the company's sales mix. c.) Assuming a consistent sales mix, how many units of each product type must the company sell to break even? d.) Assuming a consistent sales mix, if the company wishes to eam net income of $300.000, how many units of each product type must be sold? e.) Compute the margin of safety in both dollar and percentage terms
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started