Question
SKYZ Company produces two models of basketball hoops, Ausom Garage Mount and Delux Ground Mount. Presented is sales information for the year 2017: Ausom Delux
SKYZ Company produces two models of basketball hoops, Ausom Garage Mount and Delux Ground Mount. Presented is sales information for the year 2017:
Ausom | Delux | Total | |
units manufactured and sold | 1,000 | 1,500 | 2,500 |
sales revenue | $300,000 | $700,000 | $1,000,000 |
variable costs | (200,000) | (420,000) | (620,000) |
Contribution Margin | $100,000 | $280,000 | 380,000 |
Fixed Costs | (252,510) | ||
Before-tax profit | 127,490 | ||
Income taxes (40%) | (50,996) | ||
After-tax profit | $76,494 |
a) Determine the current break-even point in sales dollars.
b) With the current product mix and break-even point, determine the average unit contribution margin and unit sales.
c) Sales representatives believe that the total sales will increase to 3,000 units, with the sales mix likely shifting to 80 percent Ausom Garage Mount and 20 percent Delux Fround Mount over the next few years. Evaluate the desirability of this projection.
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