Question

Can someone help me with these questions. I've been stuck on them for a few hours now.

Homework: Chapter 3 Homework Score: 0 of 1 pt 5 of 5 (4 complete) P3-51 (similar to) The Alves Company retails two products: a standard and a deluxe version of a luggage carrier. The budgeted income statement for next period is as follows: E: (Click the icon to view the budgeted income statement.) Read the requirements Requirement 1. Compute the breakeven point in units, assuming that the company achieves its planned sales mix. Х Requirements Begin by determining the sales mix. For every 1 deluxe unit(s) sold, standard units are sold. 1. Compute the breakeven point in units, assuming that the company achieves its planned sales mix. 2. Compute the breakeven point in units (a) if only standard carriers are sold and (b) if only deluxe carriers are sold. 3. Suppose 250,000 units are sold but only 50,000 of them are deluxe. Compute the operating income. Compute the breakeven point in units. Compare your answer with the answer to requirement 1. What is the major lesson of this problem? Print Done Data Table - X Standard Carrier Deluxe Carrier 187,500 62.500 Total 250,000 Units sold $ Revenues at $28 and $50 per unit Variable costs at $18 and $30 per unit 5,250,000 $ 3,375,000 3,125,000 $ 8,375,000 1,875,000 5,250,000 $ 1,875,000 $ 1.250.000 Contribution margins at $10 and $20 per unit 3,125,000 2,250,000 Fixed costs $ 875,000 Operating income Print Done

Answer 1

Alves company,

Sales mix (standard : Deluxe) = (187,500/250,000) : (62,500/250,000)

= 0.75 : 0.25 = 3:1

Weighted average contribution margin per unit = Contribution margin × sales mix

= (10×3/4)+(20×1/4) = $ 12.5

1) Break even point = Fixed cost/weighted average contribution margin per unit

= 22,50,000/12.5 = 180,000 units

2) a) standard carrier (Break even point) = 22,50,000/10 = 2,25,000 units

b) deluxe carrier (Break even point) = 22,50,000/20

= 112,500 units

3) operating income = Sales units (selling price - variable cost) - Fixed cost

= Standard carrier contribution + deluxe carrier contribution - fixed cost

= 200,00(28-18) + 50,000(50-30) - 22,50,000

= 20,00,000+10,00,000-22,50,000

= $ 7,50,000

Weighted average contribution margin per unit = (10×200,000/250,000)+(20×50,000/250,000)

= 8+4 = 12

Break even point = 22,50,000/12 = 187,500 units