Question
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $56; white, $86; and blue, $111. The per
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $56; white, $86; and blue, $111. The per unit variable costs to manufacture and sell these products are red, $41; white, $61; and blue, $81. Their sales mix is reflected in a ratio of 2:2:1 (red:white:blue). Annual fixed costs shared by all three products are $151,000. One type of raw material has been used to manufacture all three products. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: red, by $11; white, by $21; and blue, by $11. However, the new material requires new equipment, which will increase annual fixed costs by $21,000. |
Required: | |
1. | Assume if the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. (Round up your composite units to whole number. Omit the "$" sign in your response.) |
Break-Even Points | Sales Units | Sales Dollars |
Red at break-even | $ | |
White at break-even | $ | |
Blue at break-even | $ | |
2. | Assume if the company uses the new material, determine its new break-even point in both sales units and sales dollars of each individual product. (Round up your composite units to whole number. Omit the "$" sign in your response.) |
Break-Even Points | Sales Units | Sales Dollars |
Red at break-even | $ | |
White at break-even | $ | |
Blue at break-even | $ | |
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