Question

Multiple-Product Break-Even and Target Profit Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 20,000 ceiling fans and 60,000 table fans in the coming year. Product price and cost information includes: Ceiling Fan Table Fan Price $58 $16 Unit variable cost $9 $9 Direct fixed cost $21,000 $46,000 Common fixed selling and administrative expenses total $82,000. Required: 1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)? Sales mix of ceiling fans to table fans = : 2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Round your intermediate calculations and final answers to the nearest whole number. Break-even ceiling fans Break-even table fans 3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on the unit sales calculated in Requirement 2. If an amount is zero, enter "0". Enter any negative product margin and losses with a minus sign. Do not round intermediate calculations. Round your final answers to nearest dollar. Vandenberg, Inc. Contribution-Margin-Income Statement For the Coming Year Ceiling Fans Table Fans Total $ $ $ $ $ $ $ $ $ $ 4. What if Vandenberg, Inc., wanted to earn operating income equal to $13,200? Calculate the number of ceiling fans and table fans that must be sold to earn this level of operating income. (Hint: Remember to form a package of ceiling fans and table fans based on the sales mix and to first calculate the number of packages to earn an operating income of $13,200.) Round your intermediate calculations and final answers to nearest number. Break-even ceiling fans Break-even table fans Check My Work

Answer 1

		Celling Fans	Table Fans
	Selling Price	$           58.00	$                              16.00
	Variable cost	$             9.00	$                                 9.00
	Contribution per unit(selling price - Variable cost)	$           49.00	$                                 7.00
	Direct fixed cost	$ 21,000.00	$                      46,000.00
	Estimated Units	20,000	60,000
	Common Selling Expense		$                      82,000.00
Answer(1):-	Estimated Sales Mix for next year = 20,000 :60,000 (Celling fans to table fans)
	Estimated Sales Mix for next year = 1 : 3 (Celling fans to table fans)
Answer(2):-	Particulars	Celling Fans	Table Fans
	Contribution per unit(selling price - Variable cost)	$           49.00	$                                 7.00
	Units in sales mix	1	3
	Weighted Average contribution	$           49.00	$                              21.00
	Total contribution for 1 combination as per sales mix = $70
	Total fixed cost (21000+46000+82000)	149,000
	Total combination required (149,000/70)	2,129
	(Fixed cost / contribution for 1 combination)
	Units of Celling fans for break even(2,129 * 1)	2,129
	Units of table fans for break even(2,129 * 3)	6,387
Answer(3):-	Particulars	Celling Fans	Table Fans (Amt. in $)	Total (in $)
	Sales (break even sales units * selling price)	123,482	102,192	225,674
	Variable cost (break even sales unit * variable cost)	19,182	57,492	76,674
	Contribution(sales - variable cost)	104,300	44,700	149,000
	Direct fixed cost	21,000	46,000	67,000
	Product profit (contribution - product cost)	83,300	(1,300)	82,000
	Common fixed selling and administrative expense			82,000
	Operating Income			-
Answer(4):-	Total contribution required	162,200	(149000+13200)
	Total contribution for 1 combination as per sales mix	$70
	Total combination required(162200/70)	2,317
	Units of Celling fans (2,317 * 1)	2317
	Units of table fans (2,317 * 3)	6951