Pierce Inc. manufactures Tea. Which are sold for home and office use. The machines use specially...

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Pierce Inc. manufactures Tea. Which are sold for home and office use. The machines use specially packaged portions of tea that can be purchased online only from Pierce Inc. The appeal of the machines is twofold. First, they offer a high level of convenience. The use of prepackaged tea servings means no loose-leaf mess. Also, the brewing machines have a water reservoir that for some models is large enough to make up to 20 cups of tea. Second, the taste of each cup of tea is very consistent. The company has three machine models offering different features, such as the size of the water reservoir, the number of cup sizes, and the types of filters used in the machine. Data from the most recent fiscal year for the three models are shown below: MODELS /unit Selling Price Office $150 Home Home XL $200 $300 Variable Cost $120 $6.00 $180 Yearly Units Sold 12,000 30,000 6,000 Fixed Costs 125,000 per month Required: 1. Calculate the company's overall break-even point in sales dollars and in units. 2. Calculate the overall sales dollars required to earn a target profit of $1,500,000 (ignore taxes). Assume the sales mix does not change. 3. Calculate the a) Sales dollars required for each product at the overall break-even level of sales calculated in (1) above. b) Unit sales of each product at the overall break-even level of sales units calculated in (1) above. 4. What impact would doubling the number of Home units sold next year have on the overall break-even point in sales dollars? Assume that there will be no changes to the Office or Home XL unit sales, that unit selling prices and variable costs will remain the same for each model, and that total fixed costs will be unchanged. 5. The company is considering a new advertising campaign to raise overall consumer awareness of the product offerings. The total cost of the year-long campaign would be $180,000. By how much would unit sales need to increase overall for the company to be able to justify the new campaign? How many units of each product must be sold to justify the new campaign? Assume no change to the current product mix. Pierce Inc. manufactures Tea. Which are sold for home and office use. The machines use specially packaged portions of tea that can be purchased online only from Pierce Inc. The appeal of the machines is twofold. First, they offer a high level of convenience. The use of prepackaged tea servings means no loose-leaf mess. Also, the brewing machines have a water reservoir that for some models is large enough to make up to 20 cups of tea. Second, the taste of each cup of tea is very consistent. The company has three machine models offering different features, such as the size of the water reservoir, the number of cup sizes, and the types of filters used in the machine. Data from the most recent fiscal year for the three models are shown below: MODELS /unit Selling Price Office $150 Home Home XL $200 $300 Variable Cost $120 $6.00 $180 Yearly Units Sold 12,000 30,000 6,000 Fixed Costs 125,000 per month Required: 1. Calculate the company's overall break-even point in sales dollars and in units. 2. Calculate the overall sales dollars required to earn a target profit of $1,500,000 (ignore taxes). Assume the sales mix does not change. 3. Calculate the a) Sales dollars required for each product at the overall break-even level of sales calculated in (1) above. b) Unit sales of each product at the overall break-even level of sales units calculated in (1) above. 4. What impact would doubling the number of Home units sold next year have on the overall break-even point in sales dollars? Assume that there will be no changes to the Office or Home XL unit sales, that unit selling prices and variable costs will remain the same for each model, and that total fixed costs will be unchanged. 5. The company is considering a new advertising campaign to raise overall consumer awareness of the product offerings. The total cost of the year-long campaign would be $180,000. By how much would unit sales need to increase overall for the company to be able to justify the new campaign? How many units of each product must be sold to justify the new campaign? Assume no change to the current product mix.