Carpets Corporation Jasmine encountered her boss Alddin at the espresso machine in the lounge. Aladdin is the VP of marketing at Carpets limited. Jasmine was puzzled by some calculations she had been doing so she asked: Jasmine: Aladdin, Im not sure how to go about answering the questions that came up at the meeting with the President yesterday. Aaddin: What's the problem? Jasmine: The President wanted to know the break-even for each of the company's products, but I am having trouble figuring them out. Aladdin: Im sure you can handle it, Jasmine. And by the way, I need your analysis emalled and on my computer the morning of March 13 at 8:40 sharp so I can look at it before the follow-up meeting at 9:55. Carpets make three flving carpets in its manufacturing facility in Jafar. Data on these three products are as Total fixed costs for the entire company are $282,000 per year. All three products are sold in highly competitive markets around the globe, so the company is unable to raise its prices without losing unacceptable numbers of customers. The company has no inventories of work-in process or finished goods due to an extremely efficient just-in-time system. REQUIRED 1. What is the company's overall break-even in total sales dollars? ( 5 points) 2. Of the total fixed costs of $282,000,$18,000 could be avoided if the French Carpet was dropped, $96,000 if the Mediterranean Carpet was dropped and $60,000 if the Welsh Carpet was dropped. The remaining fixed costs are common and are unavoidable unless the company went out of business: a. What is the break-even quantity and dollars of each product? (8 points) b. If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company? Explain this result. ( 2 points) Carpets Corporation Jasmine encountered her boss Alddin at the espresso machine in the lounge. Aladdin is the VP of marketing at Carpets limited. Jasmine was puzzled by some calculations she had been doing so she asked: Jasmine: Aladdin, Im not sure how to go about answering the questions that came up at the meeting with the President yesterday. Aaddin: What's the problem? Jasmine: The President wanted to know the break-even for each of the company's products, but I am having trouble figuring them out. Aladdin: Im sure you can handle it, Jasmine. And by the way, I need your analysis emalled and on my computer the morning of March 13 at 8:40 sharp so I can look at it before the follow-up meeting at 9:55. Carpets make three flving carpets in its manufacturing facility in Jafar. Data on these three products are as Total fixed costs for the entire company are $282,000 per year. All three products are sold in highly competitive markets around the globe, so the company is unable to raise its prices without losing unacceptable numbers of customers. The company has no inventories of work-in process or finished goods due to an extremely efficient just-in-time system. REQUIRED 1. What is the company's overall break-even in total sales dollars? ( 5 points) 2. Of the total fixed costs of $282,000,$18,000 could be avoided if the French Carpet was dropped, $96,000 if the Mediterranean Carpet was dropped and $60,000 if the Welsh Carpet was dropped. The remaining fixed costs are common and are unavoidable unless the company went out of business: a. What is the break-even quantity and dollars of each product? (8 points) b. If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company? Explain this result. ( 2 points)
