Question

Please answer quickly??!

Patriot Comanufactures and sells three products: red, white, and blue. Their unit selling prices are red, $60, white, S90, and blue, $115. The per unit variable costs to manufacture and sell these products are red, $45: white. $65, and blue, $85. Their sales mix is reflected in a ratio of 4.5 2 (red:white blue). Annual fixed costs shared by all three products are $155.000. One type of raw material has been used to manufacture all three products. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: red, by $15, white, by $25, and blue, by $15. However, the new material requires new equipment, which will increase annual fixed costs by $25,000. Required: 1. Assume if the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. (Round composite units up to next whole number.)

Answer 1

Determine the Selling price per composite unit
	Ratio	Selling price per unit	Total per composite unit
Red	4	$                                    60.00	$                                240.00
White	5	$                                    90.00	$                                450.00
Blue	2	$                                  115.00	$                                230.00

Determine the Variable cost per composite unit
	Ratio	variable cost per unit	Total per composite unit
Red	4	$                                    45.00	$                                180.00
White	5	$                                    65.00	$                                325.00
Blue	2	$                                    85.00	$                                170.00

Annual Fixed Cost(Shared by all three products) = $155,000

Determine the Profit Per Composite Unit
	Selling price	Variable cost	Profit
Red	240	180	60
White	450	325	125
Blue	230	170	60

Break-even point in a composite unit
Choose Numerator(Annual Fixed Cost)	/	Choose Denominator(Sum of all three composite unit profit)	=	Break-Even Units
155,000		245		632.65

The company should sale 633 composite units of each product to achieve break-even.

Break-even point in unit and sales dollar of individual product
	Number per composite unit	Number of composite units to break even	unit sales at the break-even	Dollar sales at the break-even
Red	4	633	2532	$           151,920.00
white	5	633	3165	$           284,850.00
Blue	2	633	1266	$           145,590.00

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Determine the Selling price per composite unit
	Ratio	Selling price per unit	Total per composite unit
Red	4	$                                    60.00	$                                240.00
White	5	$                                    90.00	$                                450.00
Blue	2	$                                  115.00	$                                230.00

Determine the Variable cost per composite unit
	Ratio	variable cost per unit	Total per composite unit
Red	4	$ 30.00	$                                120.00
White	5	$ 40.00	$ 200.00
Blue	2	$ 70.00	$                                140.00

Annual Fixed Cost(Shared by all three products) = $180,000

Determine the Profit Per Composite Unit
	Selling price	Variable cost	Profit
Red	240	120	120
White	450	200	250
Blue	230	140	90

Break-even point in a composite unit
Choose Numerator(Annual Fixed Cost)	/	Choose Denominator(Sum of all three composite unit profit)	=	Break-Even Units
180,000		460		391.3

The company should sale 392 composite units of each product to achieve break-even.

Break-even point in unit and sales dollar of individual product
	Number per composite unit	Number of composite units to break even	unit sales at the break-even	Dollar sales at the break-even
Red	4	392	1568	$ 94,080.00
white	5	392	1960	$ 176,400.00
Blue	2	392	784	$ 90,160.00