Question
Multiple-Product Break-even, Break-Even Sales Revenue Andrews Sporting Goods, Inc., produces and sells children's softball mitts: vinyl mitts and basic leather mitts. Last year, Andrews sold
Multiple-Product Break-even, Break-Even Sales Revenue
Andrews Sporting Goods, Inc., produces and sells children's softball mitts: vinyl mitts and basic leather mitts. Last year, Andrews sold 24,000 vinyl mitts and 12,000 leather mitts. Information on the two products is as follows:
Line Item Description | Vinyl Mitts | Leather Mitts |
---|---|---|
Price | $10 | $16 |
Variable cost per unit | 6 | 10 |
Total fixed cost is $110,700.
Suppose that in the coming year, the company plans to produce an autographed mitt. The company estimates that 6,000 autographed mitts can be sold at a price of $22 and a variable cost per unit of $10. Total fixed cost must be increased by $36,900 (making total fixed cost $147,600). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.
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