Question
Skinner Corporation manufactures and sells three products: Good, Better, and Best. Annual fixed costs are $3,315,000, and data about the three products follow. Good Better
Skinner Corporation manufactures and sells three products: Good, Better, and Best. Annual fixed costs are $3,315,000, and data about the three products follow.
|
| Good | Better | Best | |||||
| Sales mix in units | 30% | 50% | 20% | |||||
| Selling price | $250 |
| $350 |
| $500 |
| ||
| Variable cost | 100 |
| 150 |
| 250 |
| ||
Required:
- Determine the break-even volume in units for each product.
- Determine the total number of units that Skinner Corporation must sell in order to obtain a profit of $234,000.
- Assume that the sales mix for Good, Better, and Best is changed to 50%, 30%, and 20%, respectively. Will the number of units required to break-even increase or decrease? Explain. Hint: Detailed calculations are not needed to obtain the proper solution.
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Fundamentals of Financial Management
Authors: Eugene F. Brigham
Concise 9th Edition
1305635937, 1305635930, 978-1305635937
