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Hershay Candy Company manufactures a line of chocolate bars that are sold in department stores. The sales forecast for the coming year consists of
Hershay Candy Company manufactures a line of chocolate bars that are sold in department stores. The sales forecast for the coming year consists of three products: high protein, high sugar and no sugar. The company has experienced considerable variations in sales volumes and variable costs over the past two years and Victoria believes the forecast should be carefully evaluated from a cost volume profit viewpoint. The preliminary budget information for 2023 is as follows: Unit sales Unit selling price Variable manufacturing cost per unit Variable selling cost per unit High Sugar High Protein No Sugar 50,000 100,000 50,000 $ 28 $ 36 $ 48 $ 13 $12 $ 25 $5 $4 $6 For 2023 fixed factory overhead is budgeted at $2,100,000 and the company's fixed selling and administrative expenses are forecasted to be $ 600,000. The company's income tax rate is 30%. Required 1.Calculate the company's budgeted net income for 2023 using contribution margin analysis. 2.Assuming the sale mix remains as budgeted, calculate the number of units of each product the company must sell to breakeven in 2023. 3.Calculate the total dollar sales the company must sell in 2023 to earn an after tax income of $ 450,000. 4. After preparing the original estimates, the company determined its variable manufacturing cost of No Sugar chocolate bars would increase 20% and the variable selling cost of High Protein chocolate bars would increase $1 per unit. The company has decided not to increase the selling price of either product. In addition, the company has learned its No Sugar bars has been perceived as the best value on the market and it can be expected to sell three times as many No Sugar bars as any other product. Given all this information, calculate the number of units of each product the company would have to sell to breakeven in 2023.
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