Question
Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics: Basic Flash Selling price per
Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics:
| Basic | Flash | |
|---|---|---|
| Selling price per watch | $ 430 | $ 540 |
| Variable cost per watch | $ 350 | $ 300 |
| Expected sales (watches) per year | 69,000 | 23,000 |
The total fixed costs per year for the company are $1,612,800.
Required:
- What is the anticipated level of profits for the expected sales volumes?
- Assuming that the product mix is the same at the break-even point, compute the break-even point in units.
- If the product sales mix were to change to nine Basic watches for each Flash watch, what would be the new break-even volume for Woodland Wearables?
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Accounting Principles
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
11th Edition
111856667X, 978-1118566671
