Question

Patriot Co. manufactures and sells three products: red, white, and blue. Their unit selling prices are red, $46; white, $76; and blue, $101. The per unit variable costs to manufacture and sell these products are red, $31; white, $51; and blue, $71. Their sales mix is reflected in a ratio of 2:2:1 (red:white:blue). Annual fixed costs shared by all three products are $141,000. One type of raw material has been used to manufacture all three products. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: red, by $6; white, by $16; and blue, by $10. However, the new material requires new equipment, which will increase annual fixed costs by $11,000.

Required:

2. Assume if the company uses the new material, determine its new break-even point in both sales units and sales dollars of each individual product. (Round composite units up to next whole number.)

2. Determine its break-even point in both sales units and sales dollars of each individual product. Determine the selling price per composite unit. Ratio Selling price per unit Total per composite unit Red 2 White 2 Blue 1 Determine the variable costs per composite unit. Ratio Variable cost per unit Total per composite unit Red White Blue Determine the break-even point in composite units. Choose Numerator: / Choose Denominator: = Break Even Units Sales per unit / Contribution margin per unit = Break even units 0 Determine its break-even point in units and sales dollars of each individual product. Number per composite unit Number of composite units to break even. Units sales at the break-even point Dollar sales at the break-even point Red White Blue

1. Assume if the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. (Round composite units up to next whole number.)

1. Determine its break-even point in both sales units and sales dollars of each individual product. Determine the selling price per composite unit. Ratio Selling price per unit Total per composite unit Red 2 White 2 Blue 1 Determine the variable costs per composite unit. Ratio Variable cost per unit Total per composite unit Red White Blue Determine the break-even point in composite unit. Choose Numerator: / Choose Denominator: = Break Even Units Total fixed costs / Contribution margin per unit = Break even units 0 Determine its break-even point in units and sales dollars of each individual product. Number per composite unit Number of composite units to break even. Units sales at the break-even point Dollar sales at the break-even point Red White Blue

Answer 1