Question
GT has three products that it sells: Copper, Bauxite, and Gravel. Results of the fourth quarter are presented below: copper bauxite Gravel total Tonnage sold
GT has three products that it sells: Copper, Bauxite, and Gravel. Results of the fourth quarter are presented below:
copper | bauxite | Gravel | total | |
Tonnage sold | 10,000 | 20,000 | 20,000 | |
revenue | 22,000,000 | 40,000,000 | 23,000,000 | 85,000,000 |
Variable cost | 17,000,000 | 22,000,000 | 12,000,000 | 51,000,000 |
Direct fixed costs | 1,000,000 | 3,000,000 | 2,000,000 | 6,000,000 |
Allocated fixed costs | 8,000,000 | 8,000,000 | 8,000,000 | 24,000,000 |
Net income | 4,000,000 | 7,000,000 | 1,000,000 | 4,000,000 |
The allocated fixed costs are unavoidable. Demand of individual products is not affected by changes in other product lines.
Q. do a break-even analysis on each product to confirm the level of production needed for each product line.
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