Break-Even with Multiple ProductsWagner Enterprise sells two products, large tractors and small tractors. A large tractor sells for $62,000 per unit with variable costs of $28,520 per unit. Small tractors sell for $34,000 perunit with variable costs of $16,320 per unit. Total fixed costs for the company are $1,560,000. Wagner Enterprises typically sells two large tractors for every three small tractors.Assuming the sales mix remains constant, how many large and small tractors are sold (in units) at Wagner's break-even point?number of large tractors00number of small tractors.

Sales mix refers to proportion of each unit of product in relation to the total sales.It is integral…

Answered: Break-Even with Multiple Products…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21E

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Similar questions

Salvador Manufacturing builds and sells snowboards, skis and poles. The sales price and variable cost for each follows: Their sales mix is reflected in the ratio 7:3:2. If annual fixed costs shared by the three products are $196,200, how many units of each product will need to be sold in order for Salvador to break even?
Gelbart Company manufactures gas grills. Fixed costs amount to 16,335,000 per year. Variable costs per gas grill are 225, and the average price per gas grill is 600. Required: 1. How many gas grills must Gelbart Company sell to break even? 2. If Gelbart Company sells 46,775 gas grills in a year, what is the operating income? 3. If Gelbart Companys variable costs increase to 240 per grill while the price and fixed costs remain unchanged, what is the new break-even point?
Abilene Industries manufactures and sells three products (XX, W, and ZZ). The sales price and unit variable cost for the three products are as follows: Their sales mix is reflected as a ratio of 4:2:1. Annual fixed costs shared by the three products are $345.000 per year. What are total variable costs for Abilene with their current product mix? Calculate the number of units of each product that will need to be sold in order for Abilene to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.
Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
COVID 19 Corp. sells two products. Product A sells for $200 per unit, and has unit variable costs of $150. Product B sells for $50 per unit, and has unit variable costs of $20. Currently, COVID 19 Corp. sells three units of Product B and two units of Product A. COVID 19 Corp. has fixed costs of $760,000. What is COVID 19 Corp's break- even point in units? Select one: a. 8,000 units of A and 12,000 units of B b. 20,000 units of A and 20,000 units of B c. 10,000 units of A and 10,000 units of d. 12,000 units of A and 8,000 units of В
Friar Corp. sells two products. Product A sells for $112 per unit, and has unit variable costs of $65. Product B sells for $102 per unit, and has unit variable costs of $59. Currently, Friar sells three units of Product B for every one unit of Product A sold. Friar has fixed costs of $752,400. How many units would Friar have to sell to earn a profit of $250,800?
Flagstaff Tractor sells two products, large tractors and small tractors. A large tractor sells for $120,000 per unit with variable costs of $30,000 per unit. Small tractors sell for $82,500 per unit with variable costs of $18,000 per unit. Total fixed costs for the company are $5,916,000. Flagstaff Tractor typically sells one large tractor for every four small tractors. What is the breakeven point in total units? 85 units 176 units 24 units 38 units
Break-Even with Multiple Products Wagner Enterprise sells two products, large tractors and small tractors. A large tractor sells for $86,800 per unit with variable costs of $39,928 per unit. Small tractors sell for $47,600 per unit with variable costs of $22,848 per unit. Total fixed costs for the company are $2,520,000. Wagner Enterprises typically sells two large tractors for every three small tractors. Assuming the sales mix remains constant, how many large and small tractors are sold (in units) at Wagner's break-even point?
Salvadores Manufacturing builds and sells snowboards, skis and poles. The sales price and variable cost for each follows: Product Selling Priceper Unit Variable Costper Unit Snowboards $300 $160 Skis $390 $220 Poles $40 $20 Their sales mix is reflected in the ratio 8:3:2. If annual fixed costs shared by the three products are $167,000, how many units of each product will need to be sold in order for Salvadores to break even? Product Ratio (mix) Break-even percomposite unit Number of Unitsper product Snowboards 8 fill in the blank 1 fill in the blank 2 Skis 3 fill in the blank 3 fill in the blank 4 Poles 2 fill in the blank 5 fill in the blank 6
Leather and Boots Inc. makes and sells two types of shoes, Plain and Fancy. Data concerning these products are as follows: Plain Fancy Unit selling price $20.00 $35.00 Variable cost per unit 12.00 24.50 Sixty percent of the unit sales are Plain, and annual fixed expenses are $45,000. REQUIREMENTS 1) Assuming that the sales mix remains constant, the total number of units that Leather and Boots must sell to break even is? 2) Assuming that the sales mix remains constant, the total number of units that Fancy must sell to break even is?

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