Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow:

The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours.

Required:
1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even.
2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even.
 
 

Rose Violet 50,000 $100 36,000 10,000 Expected sales (in cases) Selling price per case 10,000 $80 Direct labor hours 6,000 Machine hours 3,000 Receiving orders Packing orders Material cost per case Direct labor cost per case 50 25 100 50 $50 $43 $10 $7