Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: Sales volume in units Unit
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: Sales volume in units Unit sales price Unit variable cost Brighter 400 $1,000 cleaner 600 $1,000 700 200 The number of machine hours to produce one unit of Brighter is 1, while the number of machine hours for each unit of Cleaner is 2. Total fixed costs for the manufacture of both products are $275,000. Required: 1. Determine the breakeven point in total units for Smith Company, assuming that the sales mix (on the basis of relative sales volume in units) remains constant. Use the weighted average contribution margin approach. 2. At this breakeven level, how many units of each product must be sold? Due to rounding, the total breakeven units for Requirement 2 may differ slightly than in Requirement 1. 3. Using the Indirect approach, what is the overall breakeven point in sales dollars? Use the breakeven units computed in Requirement Required 1 Required 2 Required 3 Determine the breakeven point in total units for Smith Company, assuming that the sales mix (on the basis of relative sales volume in units) remains constant. Use the weighted average contribution margin approach. (Round "Sales mix (based on units)" and "Weighted average contribution margin/unit" to 2 decimal places. Round your final answer for "Total units to breakeven" up to the nearest whole unit.) Show less A Brighter Cleaner 0.00 Contribution margin/unit Sales mix (based on units) Weighted average CM per unit Total fixed costs to be recovered + Weighted average CM per unit Total units to breakeven Required 1 Required 2 Required 3 At this breakeven level, how many units of each product must be sold? Due to rounding, the total breakeven units for Requirement 2 may differ slightly than in Requirement 1. (Round "Sales mix" to 2 decimal places. Round your final answers for "Breakdown" up to the nearest whole unit.) Brighter Cleaner 0.00 Sales mix Breakdown Required 1 Required 2 Required 3 Using the Indirect approach, what is the overall breakeven point in sales dollars? Use the breakeven units computed in Requirement 1. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.) Overall breakeven point in sales dollars
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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