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The Kenosha Company has three product lines of beer mugs-A, B, and C-with contribution margins of $5, $4, and $3, respectively. The president foresees sales
The Kenosha Company has three product lines of beer mugs-A, B, and C-with contribution margins of $5, $4, and $3, respectively. The president foresees sales of 175,000 units in the coming period, consisting of 25,000 units of A, 100,000 units of B, and 50,000 units of C. The company's fixed costs for the period are $351,000. Read the requirements. Requirement 1. What is the company's breakeven point in units, assuming that the given sales mix is maintained? Begin by determining the sales mix. For every 1 unit of Product A, D units of Product B, and units of Product C are sold. Corporate Printing Company currently leases its only copy machine for $1,500 a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based. Under the new agreement, Corporate would pay a commission for its printing at a rate of $20 for every 500 pages printed. The company currently charges $0.20 per page to its customers. The paper used in printing costs the company $0.05 per page and other variable costs, including hourly labor, amount to $0.10 per page. Read the requirements. Requirement 1. What is the company's breakeven point under the current leasing agreement? What is it under the new commission-based agreement? First, determine the formula used to calculate the breakeven point in units, then calculate the company's breakeven point under the current leasing agreement. (Enter a "O" for any zero balances.) = Breakeven number of units
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