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Exercise 3-15A (Static) Multiple product break-even analysis LO 3-6 Riku Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Sales price
Exercise 3-15A (Static) Multiple product break-even analysis LO 3-6 Riku Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Sales price Variable cost per unit Contribution margin per unit Super $ 68 (38) $ 30 Supreme $ 94 (44) $ 50 Riku expects to incur annual fixed costs of $540,000. The relative sales mix of the products is 70 percent for Super and 30 percent for Supreme. Required a. Determine the total number of products (units of Super and Supreme combined) Riku must sell to break even. b. How many units each of Super and Supreme must Riku sell to break even? (For all requirements, do not round intermediate calculations.) a. Total number of products units b. Product Super units Product Supreme units Problem 3-18A (Static) Analyzing change in sales price using the contribution margin ratio LO 3-1, 3-2 Massey Company reported the following data regarding the product it sells: Sales price Contribution margin ratio Fixed costs $ 25 40% $810,000 Required Use the contribution margin ratio approach and consider each requirement separately. a. What is the break-even point in dollars? In units? b. To obtain a profit of $270,000, what must the sales be in dollars? In units? c. If the sales price increases to $30 and variable costs do not change, what is the new break-even point in dollars? In units? a. Break-even point in dollars Break-even point in units Sales in dollars b. Sales in units C. Break-even point in dollars Break-even point in units Problem 3-22A (Static) Analyzing sales price and fixed cost using the equation method LO 3-1, 3-2, 3-5 Cahill Company is considering adding a new product. The cost accountant has provided the following data: Expected variable cost of manufacturing Expected annual fixed manufacturing costs $ 57 per unit $216,000 The administrative vice president has provided the following estimates: Expected sales commission Expected annual fixed administrative costs $ 3 per unit $104,000 The manager has decided that any new product must at least break even in the first year. Required Use the equation method and consider each requirement separately. a. If the sales price is set at $110, how many units must Cahill sell to break even? b. Cahill estimates that sales will probably be 8,000 units. What sales price per unit will allow the company to break even? c. Cahill has decided to advertise the product heavily and has set the sales price at $115. If sales are 7,200 units, how much can the company spend on advertising and still break even? a. Number of units b. Sales price c. Advertising cost per unit
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