Answered step by step
Verified Expert Solution
Question
1 Approved Answer
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $55: white, $85; and blue, $110. The per
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $55: white, $85; and blue, $110. The per unit variable costs to manufacture and sell these products are red. $40; white, $60; and blue, $80. Their sales mix is reflected in a ratio of 5:4:2 (red:white:blue). Annual fixed costs shared by all three products are $150,000. 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 $10; white, by $20; and blue, by $10. However, the new material requires new equipment, which will increase annual fixed costs by $20,000. Required: 1. Assume if the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. (Round your composite units to next whole number. Omit the "$" sign in your response.) Sales Units Sales Dollars Break-Even Points 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 your composite units to next whole number. Omit the "$" sign in your response.) Break-Even Points Sales Units Sales Dollars Red at break-even White at break-even 1768 Blue at break-even 884 2210
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started