Question
In: Accounting
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two...
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows:
| Brighter | Cleaner | |||
| Sales volume in units | 400 | 600 | ||
| Unit sales price | $750 | $1,000 | ||
| Unit variable cost | 300 | 450 | ||
The number of machine hours to produce one unit of Brighter is 1, while the number of machine hours for each unit of Cleaner is 2. Total fixed costs for the manufacture of both products are $265,200.
Required:
1. Determine the breakeven point in total units for Smith Company, based on the assumption that the sales mix (on the basis of relative sales volume in units) remains constant. Use the weighted-average contribution margin approach.
2. At this breakeven level, how many units of each product must be sold? Due to rounding, the total breakeven units for Requirement 2 may differ slightly than in Requirement 1.
3. Using the Indirect approach, what is the overall breakeven point in sales dollars? Use the breakeven units computed in Requirement 1.
Solutions
ekkarill92 answered 10 months agoRelated Solutions
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two...
Smith Company can produce two types of carpet cleaners, Brighter
and Cleaner. Data on these two products are as follows:
Brighter
Cleaner
Sales volume in units
400
600
Unit sales price
$750
$1,000
Unit variable cost
300
450
The number of machine hours to produce one unit of Brighter is
1, while the number of machine hours for each unit of Cleaner is 2.
Total fixed costs for the manufacture of both products are
$265,200.
Required:
1. Determine the breakeven...
Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two...
Smith Company can produce two types of carpet cleaners, Brighter
and Cleaner. Data on these two products are as follows:
Sales volume in units Brighter: 400 Cleaner:600 Unit sales price
Brighter:$1,000 Cleaner$1,000 Unit variable cost Brighter:200
Cleaner:700 The number of machine hours to produce one unit of
Brighter is 1, while the number of machine hours for each unit of
Cleaner is 2. Total fixed costs for the manufacture of both
products are $307,500.
Required: 1. Determine the breakeven point...
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Carpet Clean manufactures a chemical carpet cleaner. The company
was formed during the current year. As a result, there was no
beginning inventory. Management is evaluating performance and
inventory management issues, and desires to know both net income
and ending inventory under generally accepted accounting principles
(absorption costing) as well as variable costing methods. Relevant
facts are as follows:
Selling price per gallon
$ 13.00
Variable manufacturing cost per gallon
2.50
Variable SG&A costs per gallon
2.37
Fixed manufacturing costs...
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Crown Co. can produce two types of lamps, the Enlightner and
Foglighter. The data on the two lamp models are as follows:
EnlightnerFoglighterSales volume in units 580 480 Unit sales price
$300 $400 Unit variable cost 200 240 Unit contribution margin $100
$160 It takes one machine hour to produce each product. Total fixed
costs for the manufacture of both products are $130,000. Demand is
high enough for either product to keep the plant operating at
maximum capacity. Assuming that...
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You are the owner of Clean Rite Carpet Cleaners, and company
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The Garrison Company manufactures two products: Oxy Cleaner and Sonic Cleaner. The costs and revenues are...
The Garrison Company manufactures two products: Oxy Cleaner and
Sonic Cleaner. The costs and revenues are as follows:
Oxy Cleaner
Sonic Cleaner
Sales Price
$
75
$
44
Variable cost per unit
40
21
Total demand for Oxy is 10,000 units and for Sonic is 6,000 units.
Machine time is a scarce resource. During the year, 50,000 machine
hours are available. Oxy requires 4 machine hours per unit, while
Sonic requires 2.5 machine hours per unit.
What is the maximum...
A company blends two materials: A and B to produce two types of fertilizers. Fertilizer 1...
A company blends two materials: A and B to produce two types of
fertilizers. Fertilizer 1 must be at least 50% of A and sells for
$65 per kilo gram. Fertilizer 2 must be at least 70% of B and sells
for $48 per kilogram. The price of martial A is $10 per 100 kilo
grams and the price of martial B is $14 per 100 kilo grams if they
purchased over 10,000 kilo gram the price will be reduced...
A company blends two materials: A and B to produce two types of fertilizers. Fertilizer 1...
A company blends two materials: A and B to produce two types of
fertilizers. Fertilizer 1 must be at least 50% of A and sells for
$65 per kilo gram. Fertilizer 2 must be at least 70% of B and sells
for $48 per kilogram. The price of martial A is $10 per 100 kilo
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The Omega Corporation manufactures two types of vacuum cleaners: the ZENITH for commercial building use and...
The Omega Corporation manufactures two types of vacuum cleaners:
the ZENITH for commercial building use and the House-Helper for
residences. Budgeted and actual operating data for the year 2018
are as follows:
Static
Budget
ZENITH
House-Helper
Total
Number
sold
15,000
60,000
75,000
Contribution margin
$3,750,000
$12,000,000
$15,750,000
Actual
Results
ZENITH
House-Helper
Total
Number
sold
16,500
38,500
55,000
Contribution margin
$6,200,000
$10,200,000
$16,400,000
Assume that Omega Corporation operates in Midwest market. The
total Midwest market is expected to be 500,000 units...
The Octova Corporation manufactures two types of vacuum cleaners: the ZENITH for commercial building use and...
The Octova Corporation manufactures two types of vacuum
cleaners: the ZENITH for commercial building use and the
House-Helper for residences. Budgeted and actual operating data for
the year 2017 are as follows:
Static
Budget
Zenith
House-Helper
Total
Number
sold
20,000
80,000
100,000
Contribution
margin
$4,600,000
$15,200,000
$19,800,000
Actual
Results
Zenith
House-Helper
Total
Number
sold
21,500
64,500
86,000
Contribution
margin
$6,665,000
$14,190,000
$20,855,000
Computer the variances below in terms of contribution margin $.
Indicate whether the variance is favorable or unfavorable....
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