Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Amazing Drug Company has four lines of drugs (Goofy, Doofy, Woofy, & Poofy). Anson and Anika both work as accountants at the Amazing
The Amazing Drug Company has four lines of drugs (Goofy, Doofy, Woofy, & Poofy). Anson and Anika both work as accountants at the Amazing Drug Company. Anson determined that 20,000 units of Goofy, 60,000 units of Doofy, 50,000 units of Woofy, and 80,000 units of Poofy would be sold in the coming period. Anika came up with the following cost information for each product: Goofy: $8 price per unit and a 40% variable cost ratio; fixed costs are $547,158.23. Doofy: $14.44 price per unit and a $6.60 contribution margin per unit; fixed costs are combined with Poofy. Woofy: $12.60 variable cost per unit and a 30% contribution margin ratio; fixed costs are $351,124.35. Poofy: $9.24 price per unit and $1.54 variable cost per unit; fixed costs are combined with Doofy and total $612,418.82. Required: 1. Assuming the company maintains its current sales mix, what would be the company's breakeven point in units per product and in total? 2. What is operating income at the current level of sales (show an income statement)? 3. What would operating income be if the company sold 19% fewer units of Goofy and Poofy, but was able to increase sales of Doofy and Woofy by 81% (show an income statement)?
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