Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jane.inc manufactures heating blankets for the health-care market. Each heating blanket sells for $50. The variable costs per unit are as follows: Direct materials $15

Jane.inc manufactures heating blankets for the health-care market. Each heating blanket sells for $50. The variable costs per unit are as follows:

Direct materials

$15

Direct labour

5

Variable manufacturing overhead

4

Budgeted fixed manufacturing overhead is estimated at $500,000, and budgeted fixed selling, general, and administrative costs are expected to be $300,000. Variable selling costs are $6 per unit. Binder estimates that it can sell 50,000 heating blankets.

Binder is subject to tax at a rate of 30%.

Required:

a) Determine the break-even point for the heating blankets (in units).

b) Determine the number of heating blankets (in units) that must be sold for Binder to earn $100,000 in profit after taxes.

c) Determine the dollar amount of heating blanket sales that must be attained in order to earn $300,000 in profit after taxes.

d) Binder is considering adding a second product line to its sales mix: a thermal blanket. Binder estimates that it can sell 25,000 units of the thermal blanket at $30 per unit. The total variable costs would be $12. This second product would increase fixed costs by $50,000. Calculate the break-even volume (in units) of the heating blanket and the thermal blanket.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Fundamentals

Authors: John Wild

4th Edition

0078025591, 9780078025594

More Books

Students also viewed these Accounting questions

Question

What was the positive value of Max Weber's model of "bureaucracy?"

Answered: 1 week ago

Question

2. It is the results achieved that are important.

Answered: 1 week ago

Question

7. One or other combination of 16.

Answered: 1 week ago