Question
Kenneth manages an electronics store where customers can purchase phones, tablets, or accessories for their technology needs. He is trying to plan for future profitability
Kenneth manages an electronics store where customers can purchase phones, tablets, or accessories for their technology needs. He is trying to plan for future profitability and came upon a break-even number (80 units in monthly sales) that his predecessor, Annie, had calculated. Unfortunately, Kenneth found no other supporting calculations or details to determine how many of those units were phones, tablets, and accessories.
Realizing that he needs as much cost, volume, and revenue information as possible, Kenneth dug up the following information for the store.
Phones | Tablets | Accessories | |
Selling price | $860 | $470 | $100 |
Variable cost/unit | $430 | $282 | $20 |
Other monthly fixed store costs:
Salaries $7,660
Rent $4,000
Depreciation $2,600
Maintenance $1,300
Insurance $800
Utilities $600
He also determined that 25% of sales volume generally is from tablets. Additionally, customers usually purchase 1.5 times as many accessories as they do phones.
(a) Based on the above information, what is the sales mix for the three products?
Phones 30%
Tablets 25%
Accessories 45%
(b) At the break-even point, how many of the 80 units must have been phones?
Phones units
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