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Good Scent, Inc., produces two colognes: Rose and violet. Of the two, Rose is more popular. Data concerning the two productsRequired: 1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must

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Answer #1
1) conventional
Price Variable cost Contribution margin Sales mix Total Contribution margin
Rose 100 $       70.37 $       29.63 5 $148.17
Violet 80 $       57.39 $       22.61 1 $22.61
Total $170.79
Rose variable cost = $53 + $10 + [$12* × (33450/54,500)] $       70.37
Violet variable cost = $45 + $6 + [$12* × (5800/10,900)] $       57.39
*$471,000/(33450 +5800)  DLH = $       12.00 per direct labour hour
Break-even packages =  Fixed Cost/Total contribution margin
Break-even packages =  536,000/$170.79 3138.38 Packages
Break-even Cases of Rose = 5 x 3138.38    15,691.88
Break-even Cases of violet =  1 x 3138.38      3,138.38
2) Activity Based
Unit-based variable costs:
Rose Violet Total
Prime costs $       63.00 $       51.00
Benefits (a) $         3.01 $         2.61
Machine costs (b) $         4.02 $         5.46
Total $       70.03 $       59.07
× Units in mix 5 1
Total variable cost $     350.15 $       59.07 $     409.21
a)
$192325/(33450+5800)= $         4.90 per hour
Per unit of Rose: $4.90 x (33,450/54,500) = $         3.01
Per unit of Violet:$4.90 x (5,800/10,900) = $         2.61
b)

$278,675/(10,500  + 2850)=

$       20.87 Per Machine Hour

Per unit of Rose: $20.87 x (10,500/54,500) =

$         4.02

Per unit of Violet: $20.87 x (2850/10,900) =

$         5.46
Break-even packages =  Fixed Cost/Total contribution margin
Total Contribution Margin =Sales revenue per package [($100 × 5) + ($80 × 1)] – Variable cost per package ($408.91). $     170.79
Break-even packages =  536,000/$170.79 3138.38 Packages
Break-even Cases of Rose = 5 x 3138.38    15,691.88
Break-even Cases of violet =  1 x 3138.38      3,138.38
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