Question
The Norain Company sells two products; Chicken C and Beef B. The information about sales price, variable expenses per unit and total fixed expenses is
The Norain Company sells two products; Chicken C and Beef B. The information about sales price, variable expenses per unit and total fixed expenses is given below:
Chicken | Beef | |
Sales price | $50 per unit | $100 per unit |
Variable expenses | $30 per unit | $40 per unit |
The total monthly fixed expenses of the company are $400,000. The company wants to generate an operating income of $500,000 or above in the next month. To obtain this goal the company has the following options: (i) Sell 6,000 units of chicken and 18,000 units of beef. (ii) Sell 10,000 units of chicken and 5,000 units of beef.
Required:
- Calculate break-even point of both products if Norain decides to select option (i).
- Calculate break-even point of both products if Norain decides to select option (ii).
- If only chicken is produced, how many units will be sold to achieve the target net income?
- Show all steps and explain your answers.
Marks: 10 || Submission: 03/11/2021|| Mode: Blackboard
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