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Hello i need some help on this 3 part homework assignment thank you for the help in advance! Sales mix and break-even sales Data related
Hello i need some help on this 3 part homework assignment thank you for the help in advance!
Sales mix and break-even sales Data related to the expected sales of laptops and tablets for Tech Products Inc. for the current year, which is typical of recent years, are as follows: Products Unit Selling Price Unit Variable Cost Sales Mix Laptops $1,600 $800 40% Tablets 900 450 60% The estimated fixed costs for the current year are $11,682,000. Required: 1. Determine the estimated units of sales of the overall company product, M, necessary to reach the break-even point for the current year. units 2. Based on the break-even sales (units) in part (1), determine the unit sales of both laptops and tablets for the current year. Laptops units Tablets units 3. Assume that the sales mix was 60% laptops and 40% tablets. Compare the break-even point with that in part (1). Why is it: different units The break-even point is lower _ v in this scenario than in part (1) because the sales mix is weighted more heavily __ v toward the product with the higher contribution margin per unit _ v of product. Feedback Check My Work 1. Subtract the combined unit variable cost from the combined unit selling price to determine the combined unit contribution margin. Divide the fixed costs by the combined unit contribution margin to arrive at total break-even units. 2. Multiply the sales mix percentages for each product to determine the respective break-even units for laptops and tablets. 3. Calculate using the same process as in requirement (1) except with a 60/40 sales mix. How does the sales mix affect the break-even point? Consider the effect of the contribution margin for each product when answering.Break-even sales under present and proposed conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: Sales $190,000,000 Cost of goods sold (99,000,000) Gross profit $91,000,000 Expenses: Selling expenses $16,000,000 Administrative expenses 17,400,000 Total expenses (33,400,000) Operating income $57,600,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $13,300,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total xed costs for the current year. Total variable costs $ J 90,000,000 Total fixed costs $ 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost $ Unit contribution margin $ 3. Compute the break-even sales (units) for the current year. units 4. Compute the break-even sales (units) under the proposed program for the following year. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $57,600,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant. $ 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? $ income "*3 J 8. Based on the data given, wouid you recommend accepting the prop05ai? a. In favor of the proposal because of the reduction in breakeven point. b. In favor of the proposal because of the possibility of increasing income from operations. c. In favor of the proposal because of the increase in breakeven point. d. Reject the proposal because if future sales remain at the current level, the income from operations will increase. e. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct answer. 'b'm/ Feedback Check My Work 1. Multiply the percentages for fixed and variable costs by each cost. 2. a. Divide the total variable costs by number of units. 2. b. Sales price per unit minus variable costs per unit equals contribution margin per unit. 3. Fixed costs divided by unit contribution margin equals break-even point. 4. Fixed costs under the proposed program divided by contribution margin equals new break-even point. 5. (Fixed costs + Target profitidivided by unit contribution margin equals sales units. 6. Determine the increase in units by dividing the sales increase by the price per unit. Add the additional revenue and additional fixed costs when calculating: Sales minus fixed and variable costs equals income from operations. 7. Subtract the additional fixed costs from the operating income. 8. Consider the break-even point and the sales needed for the proposed levelStep by Step Solution
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