Question

Sarasota and Associates produces two products named Loser and Big Winner. Last month 1,000 units of Loser and 4,000 units of Big Winner were produced and sold. Average prices and costs for the two products for last month follow: Big Loser Winner Selling price $ 88 $ 228 Direct materials 36 99 Direct labour 5 25 Variable overhead 5 15 Product line fixed costs 10 40 Corporate fixed costs 22 22 Average margin per unit $ 10 $ 27 The production lines for both products are highly automated, so large changes in production cause very little change in total direct labour costs. Workers who are classified as direct labour monitor the production line and are permanent employees who regularly work 40 hours per week, All costs other than corporate fixed costs listed under each product line could be avoided if the product line were dropped. Corporate fixed costs totalled $110,000, and the total sales amounted to 5,000 units, producing the average cost per unit of $22. About $10,380 of the corporate fixed costs could be avoided if Loser were dropped, and about $15,630 of the corporate fixed costs could be avoided if Big Winner were dropped. The remaining $83,990 could be avoided only by going out of business entirely. X Your answer is incorrect. Try again. What is the overall corporate breakeven in total sales revenue, assuming that the sales mix is the same as last month's? (Round intermediate calculations to 5 decimal places, e.g. 1.24647 and final answer to 0 decimal places, e.g. 5,278.) Breakeven revenue: 703.51758 LINK TO TEXT LINK TO TEXT

Answer 1

Answer average Contribution mangin pear unit. Pagena D a Labour is a fixed Cost the Let us Auflume Loser Volume Total BigWinner . 1000 4000 5000 Porice perunit : $88 $228 variable Cost per unit? Loser Big Winner Direct materials 36 ११ Variable Overhead s IS Total per unit rly 4 Product line fixed Cost i Loser Bighlinnen Direct labor S 25 Product line fixed lo ५० Total per unit $15 $65

Bighlinnen Total variable Codt Pageno By multiply peor unit amount x Volume Loser Total Total Revenue 88 X 1000 228 X4000 188,000 $1,000,000 3912000 U1X1000 ( 114x4ooo $ 494000 $41000 =$456000 Contribution in $44000 456000 50 3,000 Total Revenue Total variablecat Total fixed Cast:- Hoonen Loser 15X1000 = 15000 Product line fixed Cost Corporate fixed cost Total Winner Total 65 44000 $275000 = 260,000 $10000 $385000 The Ovedall cooperate breakeven in revenue will be Total fixed cost Contribution margin ratio 38 5000 $ 385000 SO 3000 0503 1000 000 765407.5547 $ 765408

Pageno nol3 Boreak-even's Sales volumes Avoidable Fixed co&t:- Product line Corporate Total = IS000 10380 $ 25,380 By multiplying total volume times the per unit Product line fixed cost rate, Price per ant from poort (1) Total per unit ६५ Contribution morgin peor cenit avoidable cost Break even point contribution margin $88 -$41 $ 25380 = $ 540 Breakeven point fout loser [siya umili