Question

Sundial, Inc. produces two models of sunglasses-AU and NZ. The sunglasses have the following characteristics Selling price per unit Variable cost per unit Expected units old per year $ 200 250 50,00 The total fixed costs per year for the company are $7830,000 Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix is the same at the break-even point compute the break-even point c. If the product sales mix were to change to four pairs of AU sunglasses for each paw of NZ sunglasses what would be the new break-even volume for Sundial, Inc.? cmplete this question by entering your answers in the tabs below. Required A Required a Required Asuming that the product mix is the same at the break-even point compute the break even point units Required A Required >

Answer 1

Sales mix = AU:NZ = 40,000 : 60,000

= 4:6

Weighted-average contribution margin per unit

= ((500-200)*4+(500-250)*6)/(4+6)

= (1200+1500)/10

= 270

Breakeven point = Fixed cost/Weighted average contribution margin

= 7,830,000/270

= 29,000 units