XYZ Company has three products X, Y, and Z. X sells for $20 with a variable cost
ID: 2446127 • Letter: X
Question
XYZ Company has three products X, Y, and Z. X sells for $20 with a variable cost of $8, Y sells for $30 with a variable cost of $21, Z sells for $50 with a variable cost of $40. Fixed costs amount to $214,000. Furthermore, assume that for every 5 units of X that are sold, the company sells 3 units of Y and 2 units of Z.
1) Determine break-even in units and dollars of each product.
2) Assuming a desired profit of $107,000, how much of each product should be sold?
3) Assuming a desired net profit of $149,800 and a tax rate of 30%, how much of each product should be sold?
Explanation / Answer
(A).Berak-Even Iin Units:
(X). Sells = $ 2,14,000 / 20 - 8
17,833.33
= 17,833.33 + 5 more Units Sold
= 17,838.33 Units
(Y). Sells = $ 2,14,000 / 30 - 21
= 23,777.77
= 23,77.77 + 3more Units Sold
= 23,780.77
(Z). Sells = $ 2,14,000 / 50 - 40
= 21,400 Units
= 21,400 + 2 more Units Sold
= 21,402 Units
(B). Fixed Cost + Desired Profit / P.V Ratio
P.v Ratio = Contribution / Sales * 100
Contribution = Selling Price Per Unit - Variable Cost Per Unit
(X). Contribution = 20 - 8 * 100
= 1,200
P.V Ratio = 1200 / 20 * 100
= 6,000
(Y). Contribution 30 - 21 * 100
= 900
P.V Ratio = 900 / 30 * 100
= 3,000
(Z). Contribution 50 - 40 * 100
= 1,000
= 1,000 / 50 * 100
= 2000
(C). Sales Required When Profit:
Contribution = 1,49,800 * 30 / 100
= $ 44,940
Berak-Even Iin Units = Fixed Cost / Selling Price Per Unt-Variable Cost Per UnitRelated Questions
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