Praveen Co. manufactures and markets a number of rope products. Management is co

Question

Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $220 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $413,600, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $132 per 100 yards of XT rope 1. Estimate Product XT's break-even point in terms of sales units and sales dollars. (1 unit= 100 yards) (Do not round intermediate calculations.) Contribution margin per 100 yds Contribution margin Contribution margin ratio Choose Numerator: Choose Denominator: Contribution margin ratio Contribution margin ratio 1(a) Estimate Product XT's break-even point in terms of sales units. (1 unit-100 yards) Choose Numerator: Choose Denominator: Break-even units Break-even units 1(b) Estimate Product XT's break-even point in terms of sales dollars Choose Numerator:Choose Denominator: Break-even dollars Break-even dollars

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Sales price per 100 yards                  220.00 Variable cost per 100 yards                  132.00 Contribution per 100 yards                    88.00 Contribution margin ratio = 88/220 40.00% Break even point in units = 413,600/88              4,700.00 Break even point in $= 413,600/40%      1,034,000.00 Units $ per unit Total Sales              4,700.00                  220.00             1,034,000.00 Less Variable Expenses              4,700.00                  132.00                 620,400.00 Contribution Margin              4,700.00                    88.00                 413,600.00 Fixed cost                 413,600.00 Net operating income                                   -

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