Question
Starting from January 1, 2025 Lost-As-Rock Pillow Limited will make and sell three products. The key financial information for 2025 related to these products are
Starting from January 1, 2025 Lost-As-Rock Pillow Limited will make and sell three products. The key financial information for 2025 related to these products are as follows:
Activity | Rotten Chair | Mixed Seat | Feather Pillow |
Selling Price | $181.75 | $121.10 | $137.50 |
Direct Material (per unit) | $17.60 | $14.40 | $19.90 |
Direct Labour (per unit) | $12.30 | $16.30 | $12.50 |
Variable Manufacturing Overhead (per unit) | $23.80 | $9.40 | $14.40 |
Variable Selling Expense (per unit) | $23.70 | $14.80 | $13.30 |
Fixed Manufacturing Overhead (total) | $28,900,000 | $56,500,000 | $66,400,000 |
Fixed Administrative Overhead (total) | $15,100,000 | $42,500,000 | $18,500,000 |
Fixed Marketing (total) | $44,300,000 | $11,600,000 | $30,100,000 |
The company projects a sales mix of 30:40:30. In 2025 the company plans on producing and selling 18,000,000 units.
Required:
- Compute the breakeven quantity in 2025 for the sales mix and the quantity of overall units the company plans to produce and sell. [2 Marks]
- Compute the breakeven revenue in 2025 for the sales mix and the quantity of overall units the company plans to produce and sell. [2 Marks]
- Compute the breakeven quantity in 2025 for the sales mix and the quantity of overall units the company plans to produce and sell if desire a target net income of $26,000,000. [2 Marks]
- Compute the breakeven revenue in 2025 for the sales mix and the quantity of overall units the company plans to produce and sell if desire a target net income of $18,000,000. [2 Marks]
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