Question

Q5. Dersyn Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: Standard $150 $120 $16 Deluxe $165 $126 $13 Selling Price per Unit Variable Production Costs Variable Selling Expense per Unit Expected Monthly Sales in Units Total Monthly Fixed Cost (Common to Both) 1,200 600 $15,000 Calculate the break-even in sales dollars for the expected sales mix. Show all your calculations

Answer 1

Break even point = $ 17,045 Standard Deluxe total Sales unit 600 1200 Selling Price Sales value 150 S 1,650 A 1,980,000 $ 90,000 $ 2,070,000 136 S variable cost per unit 139 81,600 $ 8,400 $ Less Variable cost 166,800 $ 1,813,200 $ B 248,400 Contribution margin A-B C 1,821,600 Less:Fixed cost 15,000 Profit/ (loss) C-D 1,806,600 F PV Ratio Contribution/Sales = 1821600 /2070000 88.00% Variable cost ratio 100 % - 88 % = 12 % Break even point = Fixed Cost P V Ratio 15000/88% 100 $ 17,045 In break even point sale there will be no Profit or loss. For your Understanding Value Sales value 17,045 Less Variable cost ( 12% ) Contribution margin 2,045 15,000 Less :Fixed cost 15,000 Profit/ (loss) C-D (0)