Silky Smooth lotions come in three sizes: 4, 8, and 12 ounces. The following tab

Question

Silky Smooth lotions come in three sizes: 4, 8, and 12 ounces. The following table summarizes the selling prices and variabkle costs per case of each lotion size. Fixed costs are $771,000. Current production and sales are 2,000 cases of 4-ounce bottles; 4,000 cases of 8-ounce bottles; and 1,000 cases of 12-ounce bottles. Silky Smooth typically sells three lotion sizes in fixed proportions as represented by the preceding sales amounts. How many cases of 4-,8-, and 12-ounce lotion bottles must be produced and sold for Silky Smooth to break even, assuming that the three sizes are sold in fixed proportions? Per Case 4 ounce 8 ounce 12 ounce Price $36.00 $66.00 $72.00 Variable Cost $13.00 $24.50 $27.00

Explanation / Answer

Breakeven quantity for 4-ounce bottles = 2*3000 = 6000 units Breakeven quantity for 8-ounce bottles = 4*3000 = 12000 units Breakeven quantity for 12-ounce bottles = 1*3000 = 3000 units

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