Valley Company sells two products. Product M sells for $12 and has variable costs per unit...

Valley Company sells two products. Product M sells for $12 and has variable costs per unit of $7. Product Q’s selling price and variable costs are $15 and $10, respectively. If fixed costs are $60,000 and Valley sells twice as many units of Product M as Product Q, what is the break-even point in units for Product M?

Solutions

Expert Solution

Break even point for standard mix = Fixed cost/Weighted average contribution margin per unit
= $60000/$5
= 12000

Break even point for Product M = 12000 units/3 units x 2 units = 8000 units

Contribution margin for Product M	$12-$7 = $5
Contribution margin for Product Q	$15-$10 = $5

Contribution margin per standard mix	(2x$5) + $5
	$15

Average contribution margin per unit	$15/3units
	$5

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Twin Products Company produces and sells two products. Product M sells for $12 and has variable...

Twin Products Company produces and sells two products. Product M sells for $12 and has variable costs of $6. Product W sells for $15 and has variable costs of $10. Twin predicted sales of 25,000 units of M and 20,000 of W. Fixed costs are $60,000 per month. Assume that Twin achieved its sales goal of $600,000 for September, but fell short of its expected operating income of $190,000. Which of the following descriptions best describes the actual results reported...

QUESTION 12 Boomerang company sells a product at $100 per unit that has unit variable costs...

QUESTION 12 Boomerang company sells a product at $100 per unit that has unit variable costs of $30. The company's break-even sales point in sales dollars is $150,000. How much profit will the company make if it sells 4,000 units? A. $70,000 B. $120,000 C. $175,000 D. $215,000 8.71 points QUESTION 13 During its first year of operations, Buzz Lightyear Company paid $35,000 for direct materials and $70,000 in wages for production workers. Lease payments, utility costs, and depreciation...

Our company sells a product for $150 per unit. Variable costs are $90 per unit and...

Our company sells a product for $150 per unit. Variable costs are $90 per unit and fixed costs are $18,000. The company expects to sell 800 units this year. How many units must we sell to break even? a) 300 b) 320 c) 360 d) 400 Our company has reviewed the utilities bills for our company. We have determined that the highest and lowest bills were $5,600 and $3,200 for the months of January and September. If we produced 1,200...

1. A company sells their product for $360 per unit and they have variable costs per...

1. A company sells their product for $360 per unit and they have variable costs per unit of $293. The fixed costs of the company are presently $3,000,000. If the company increases the fixed costs by 25% and increases the selling price per unit by 10%, with variable costs per unit remaining the same, the breakeven point in units will: a. decrease b. increase c. remain the same d. Not enough information given 2. From the...

Company sells its product for $11700 per unit. Variable costs per unit are: manufacturing, $5500; and...

Company sells its product for $11700 per unit. Variable costs per unit are: manufacturing, $5500; and selling and administrative, $135. Fixed costs are: $30000 manufacturing overhead, and $40000 selling and administrative. There was no beginning inventory at 1/1/18. Production was 20 units per year in 2018–2020. Sales were 20 units in 2018, 16 units in 2019, and 24 units in 2020. Income under variable costing for 2019 is $27040. $33040. $35200. $60080.

Quiz Company sells its product for $10 per unit. Variable costs are $6 per unit and...

Quiz Company sells its product for $10 per unit. Variable costs are $6 per unit and fixed costs are $15,000 per week. During the third week of July, Quiz Company sold 5,000 units. 1. Determine the number of units Quiz Company must sell to earn operating income of $8,000. 2. Determine the sales revenue (in dollars) Quiz Company must generate to break even. 3. Determine the sales revenue (in dollars) Quiz Company must generate to earn operating income of $8,000....

A company sells two products, Product A and Product B. Assume that the variable costs for...

A company sells two products, Product A and Product B. Assume that the variable costs for each product are $7. In a particular market, men and women value the two products as follows: Value to the Customer Product A Product B Men (50 % of market) $ 12 $ 15 Women (50 % of market) $ 14 $ 11 If management is considering offering a bundle containing both products, what is the maximum price that could be charged for this...

A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are...

A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are $6 and total fixed costs are $12,000. At this selling price, the company earns a profit equal to 10% of total dollar sales. By reducing its selling price to $9 per unit, the manufacturer can increase its unit sales volume by 25%. Assume that there are no taxes and that total fixed costs and variable costs per unit remain unchanged. If the selling price...

Cantor Products sells a product for $83. Variable costs per unit are $46, and monthly fixed...

Cantor Products sells a product for $83. Variable costs per unit are $46, and monthly fixed costs are $125,800. a. What is the break-even point in units? b. What unit sales would be required to earn a target profit of $321,900? c. Assume they achieve the level of sales required in part b, what is the degree of operating leverage? (Round your answer to 3 decimal places.) d. If sales decrease by 30% from that level, by what percentage...

Huntzburger products sells a product for $75. variable costs per unit are $50 and monthly fixed...

Huntzburger products sells a product for $75. variable costs per unit are $50 and monthly fixed costs are $75000. answer following questions. a) what is break even points in units? b) what unit sales would be required to earn a profit target of $200,000 c) assume they achieve the sales required in part b what is the degree of operating leverage? d) if sales decrease by 30% from that level by what percentage will profits decrease?

Subjects