Question

Pure Water Products produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher-filter that only purifies water meant for drinking. Revenue and cost information for each product appears below: ● the unit that attaches to the faucet is sold for $70 and has variable costs of $45 ● the pitcher-filter sells for $80 and has variable costs of $30 ● fixed costs total $442,000 ● Pure Water sells 4 faucet models for every 3 pitcher-filters sold Calculate the number of units of the faucet-model that must be sold in order for Pure Water Products to earn a target profit of $212,000.

Answer 1

Particular	Faucet	Pitcher
Selling price	$70	$80
Variable cost	$45	$30
Contribution margin	$25	$50
Sales mix	4	3
Total	$100	$150

Total = $100 + $150 = $250

$250x - $442,000 = $212,000

$250x = $654,000

x = 2,616 units

NUmber of units of the faucet-model that must be sold = 2,616 units * 4

= 10,464 units