Question
The Quillcast Company sells two models of lawnmower. The first is a mulching mower, which sells for $400 per unit. The second is a ride-on
The Quillcast Company sells two models of lawnmower. The first is a mulching mower, which sells for $400 per unit. The second is a ride-on mower that sells for $800 per unit. The marketing department has determined that Quillcast will sell 1,200 mulching mowers and 800 ride-on mowers during the coming year. The accountant has prepared the following projected statement of profit or loss (in contribution margin format) based on the marketing departments sales forecast.
| Mulching mower |
| Ride-on mower |
| Total |
Sales revenue | $480,000 |
| $640,000 |
| $1,120,000 |
Less: Variable costs | 390,000 |
| 480,000 |
| 870,000 |
Contribution margin | $90,000 |
| $160,000 |
| 250,000 |
Less: Fixed costs |
|
|
|
| 96,250 |
Operating profit |
|
|
|
| $153,750 |
Required
How many mulching mowers and how many ride-on mowers would Quillcast have to sell to break even if it continues to sell three mulching mowers for every two ride-on mowers sold?
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