Sales Mix and Break-Even Sales Data related to the expected sales of laptops and tablets for Tech Products Inc. for the current year, which is typical of recent years, are as follows: Products Unit Selling Price Unit Variable Cost Sales Mix Laptops $180 $120 20% Tablets 540 250 80% The estimated fixed costs for the current year are $775,920. Required: 1. Determine the estimated units of sales of the overall (total) product, E, necessary to reach the break-even point for the current year. units 2. Based on the break-even sales (units) in part (1), determine the unit sales of both laptops and tablets for the current year. Laptops: units Tablets: units 3. Assume that the sales mix was 80% laptops and 20% tablets. Determine the estimated units of sales of the overall product necessary to reach the break-even point for the current year. units Why is it so different? The break-even point is in this scenario than in part (1) because the sales mix is weighted heavily toward the product with the contribution margin per unit of product. Break-Even Sales and Cost-Volume-Profit Chart Last year Hever Inc. had sales of $550,000, based on a unit selling price of $220. The variable cost per unit was $176, and fixed costs were $44,000. The maximum sales within Hever Inc.'s relevant range are 3,200 units. Hever Inc. is considering a proposal to spend an additional $19,800 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity. Required: 1. Construct a cost-volume-profit chart on your own paper, indicating the break-even sales for last year. In your computations, do not round the contribution margin percentage. Break-even sales (dollars) $198,000 X Break-even sales (units) 1,100 X 2. Using the cost-volume-profit chart prepared in part (1), determine (a) the income from operations for last year and (b) the maximum income from operations that could have been realized during the year. In your computations, do not round the contribution margin percentage. Income from operations $110,000 X Maximum income from operations $660,000 X signed for the additional billboard 3. Construct a cost-volume-profit chart (on your own paper) indicating the break-even sales for the current year, assuming that a noncancellable contract advertising. No changes are expected in the unit selling price or other costs. In your computations, do not round the contribution margin percentage. Dollars $319,000 Units 1,350 X 4. Using the cost-volume-profit chart prepared in part (3), determine (a) the income from operations if sales total 2,500 units and (b) the maximum income from operations that could be realized during the year. In your computations, do not round the contribution margin percentage. Income from operations at units $46,200 Maximum income from operations $640,200 X
