Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: Brighter Cleaner Sales volume in

Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows:

Brighter Cleaner
Sales volume in units 400 600
Unit sales price $750 $1,000
Unit variable cost 300 450

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 $265,200.

Required:

1. Determine the breakeven point in total units for Smith Company, based on the 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 1.

Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: Brighter Cleaner Sales volume in units 400 600 Unit sales price $750 $1,000 Unit variable cost 300 450 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 $265,200. Required: 1. Determine the breakeven point in total units for Smith Company, based on the 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 1.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Pauline Weetman

6th Edition

0273789252, 978-0273789253

More Books

Students also viewed these Accounting questions

Question

Describe voluntary benefits.

Answered: 1 week ago

Question

Describe the major job evaluation systems.

Answered: 1 week ago