Multiple-Product Break-Even and Target Profit

Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 40,000 ceiling fans and 60,000 table fans in the coming year. Product price and cost information includes:

Ceiling Fan Table Fan

Price $64 $19

Unit variable cost $14 $4

Direct fixed cost $22,400 $44,000

Common fixed selling and administrative expenses total $86,000.

Required:

1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)?

Sales mix of ceiling fans to table fans = ___ : ___

2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Round your intermediate calculations and final answers to the nearest whole number.

Break-even ceiling fans

Break-even table fans

3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on the unit sales calculated in Requirement 2. If an amount is zero, enter "0". Enter any negative product margin and losses with a minus sign. Do not round intermediate calculations. Round your final answers to nearest dollar.

Vandenberg, Inc.

Contribution-Margin-Income Statement

For the Coming Year

Ceiling Fans Table Fans Total

4. What if Vandenberg, Inc., wanted to earn operating income equal to $14,400? Calculate the number of ceiling fans and table fans that must be sold to earn this level of operating income. (Hint: Remember to form a package of ceiling fans and table fans based on the sales mix and to first calculate the number of packages to earn an operating income of $14,400.) Round your intermediate calculations and final answers to nearest number.

Break-even ceiling fans

Break-even table fans