The Wharton Company retails two products: a standard and a deluxe version of a luggage carrier. The budgeted income statement for next period is as follows:

Data Table

	Standard Carrier	Deluxe Carrier	Total
Units sold	187,500	62,500	250,000
Revenues at $28 and $50 per unit	$5,250,000	$3,125,000	$8,375,000
Variable costs at $18 and $30 per unit	3,375,000	1,875,000	5,250,000
Contribution margins at $10 and $20 per unit	$1,875,000	$1,250,000	3,125,000
Fixed costs			2,250,000
Operating income			$875,000

Requirements

1.	Compute the breakeven point in units, assuming that the company achieves its planned sales mix.
2.	Compute the breakeven point in units (a) if only standard carriers are sold and (b) if only deluxe carriers are sold.
3.	Suppose 250,000 units are sold but only 50,000 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?

Requirement 1. Compute the breakeven point in units, assuming that the company achieves its planned sales mix.

Begin by determining the sales mix. For every 1 deluxe unit(s) sold,

?

standard units are sold.

Determine the formula used to calculate the breakeven point when there is more than one product sold. Then, enter the amounts in the formula to calculate the breakeven point.

Fixed costs

Contribution margin per bundle

=

Breakeven point in bundles

?

?

=

?

The breakeven point is

?

standard units and

?

deluxe units.

Requirement 2. Compute the breakeven point in units (a) if only standard carriers are sold and (b) if only deluxe carriers are sold.

(a) If only standard carriers are sold, the breakeven point is

?

units.

(b) If only deluxe carriers are sold, the breakeven point is

?

units.

Requirement 3. Suppose 250,000 units are sold but only 25,000 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 if 250,000 units are sold but only 25,000 of them are deluxe.

	Standard Carrier	Deluxe Carrier	Total
Units sold
Revenues at $25 and $45 per unit
Variable costs at $15 and $25 per unit
Contribution margin
Fixed costs
Operating income

Before calculating the breakeven points, determine the new sales mix.

For every 1 deluxe carrier sold,

?

standard carriers are sold.

Compute the breakeven point in units, assuming the new sales mix. (Round your answers up to the next whole number.)

The breakeven point is

?

standard units and

?

deluxe units.

Compare your answer with the answer to requirement 1. What is the major lesson of this problem?