The Ready Company retails two products a standard and a deluxe version of a luggage carrier The budgeted income statement for next period is as follows: Click the icon to view the budgeted income statement) Read the requirements (a) If only standard carriers are sold the breakeven point is 260,000 units (b) If only deluxe carriers are sold the breakeven point is 65,000 units Requirement 3. Suppose 220,000 units are sold but only 22,000 of them are deluxe Compute the operating income Compute the breakeven point in units Compare your answer with the answer to requirement 1 What is the major lesson of this problem? Compute the operating income il 220.000 units are sold but only 22,000 of them are deluxe Standard Carrier Deluxe Carrier Total Units sold Revenues at $20 and $37 per unit Variable costs at $15 and $17 per unit Contribution margin Fixed costs Operating income Formula for BEP when there is more than one product = Fixed Costs / Weighred Average Contribution Margin. Weighted Average Contribution Margin is calculated taking the sales min percentage into consideration. Steps involed in the calculation and approtionment to the products are as follows: 271000 14000 30.00 20.00% 20 17 15 17 Sales (Units) Sales Mix Percentage Selling Price Less: VariableCosts Contribution Marghe Sales mix Percentage Weighted Average CMICM per mit Sales M Sum of weighted Average CM 30.00 20.00 L00 Even Points of Sales Milk Faed cost weighted Avg CM per unit *1300000/ Standard Dela Sales Mix Percentage 20 * Total Break Even Units 13500 143500 Units to be sold to bakeven 176000 Requirement 2: If only Standard carriers was sold, then the BEP in units is Standard Sales (Units) Selling Price 20 Less: VariableCosts 15 Contribution Margin Fixed Costs 1300000 BEP in units =Fixed Costs / CM per unit 260000 units If only Deluxe carriers was sold, then the BEP in units is 5 Deluxe Sales (Units) 44000 Selling Price 37 Less: VariableCosts 17 Contribution Margin 20 Fixed Costs 1300000 BEP in units =Fixed Costs/CM per unit 65000 units Hope this helps! In case of any clarifications, kindly use the comment box below The breakeven point is standard uns alu - - i Data Table Standard Carrier Deluxe Carrier Total 176,000 44,000 220,000 R ir n Units sold Revenues at $20 and $37 per unit $ 1,628,000 $ 5,148,000 3,520,000 $ 2,640,000 d 748,000 3,388,000 Variable costs at $15 and $17 per unit $ 880,000 $ 880,000 Contribution margins at $5 and $20 per unit 1 760 000 1,300,000 Fixed costs S 460,000 Operating income EN Print Done 2