Homework Answers
Solution : 1. Calculation of Break Even Point in total units for Smith Company :-
| Particulars | Brighter | Cleaner |
| Selling Price per unit | $ 1000 | $ 1000 |
| Less : Variable Costs per unit | $ 200 | $ 700 |
| Contribution Margin Per Unit | $ 800 | $ 300 |
| Brighter | Cleaner | ||
| Contribution Margin Per Unit | $ 800 | $ 300 | |
| Sales Mix (Based on Units) | 400 Units / 1000 Units = 0.4 | 600 Units / 1000 Units = 0.6 | |
| Weighted Average CM Per Unit | 0.4* $800 +0.6* $300 = $ 500 | ||
| Total Fixed Costs | $ 300000 | ||
| Breakeven in Units | Total Fixed Costs/ Weighted Average CM per unit | ||
| = $ 300000 / S 500 = 600 Units |
2. Calculation of Break Even Point for each product :-
| Brighter | Cleaner | Total | |
| Sales Mix | 0.4 i.e 40% | 0.6 i.e 60% | 100% |
| Breakeven in Units | 600 Units *40% = 240 Units | 600 Units * 60% = 360 Units | 600 Units |
3. Calculation of Overall Breakeven in Unit Dollars :-
Breakeven Point in Units = 600 Units
Selling Price Per Unit = $ 1000
Breakeven Point in Unit Dollars = Breakeven point in Units * Selling Price per Unit
= 600 Units * $ 1000 = $ 600000
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Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: Brighter 400 Cleaner Sales volume in units 600 Unit sales price Unit variable cost $1,000 $1,000 200 700 The number of machine hours to produce one unit of Brighter is 1, while the number of machine hours for each unit of Cleane is 2. Total fixed costs for the manufacture of both products are $295,000. Required: 1. Determine the breakeven...
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two...
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Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: Sales volume in units Unit sales price Unit variable cost Brighter 400 $1,000 cleaner 600 $1,000 700 200 The number of machine hours to produce one unit of Brighter is 1, while the number of machine hours for each unit of Cleaner is 2. Total fixed costs for the manufacture of both products are $275,000. Required: 1. Determine the breakeven...
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Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: 1600 Sales volume in units Unit sales price Unit variable cost Brighter 400 $750 300 cleaner 600 $1,000 450 The number of machine hours to produce one unit of Brighter is 1, while the number of machine hours for each unit of Cleaner is 2. Total fixed costs for the manufacture of both products are $265,200. Required: 1. Determine the...
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Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: Brighter 400 Cleaner Sales volume in units 600 Unit sales price Unit variable cost $1,000 $1,000 200 700 The number of machine hours to produce one unit of Brighter is 1, while the number of machine hours for each unit of Cleane is 2. Total fixed costs for the manufacture of both products are $295,000. Required: 1. Determine the breakeven...
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Done The products often have different unit variable costs. Thus, the total profit and the breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among various products sold by a firm. Assume that the sales of Jordan, Inc, for a typical year are as follows Units Sold Sales Mix 18,000 20 Total Assume the following unit selling prices and unit variable costs Product Selling Price per UiVariable...
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