Business Solutions sells upscale modular desk units and office chairs in the rat
ID: 2482168 • Letter: B
Question
Business Solutions sells upscale modular desk units and office chairs in the ratio of 2:1 (desk unit:chair). The selling prices are $1,330 per desk unit and $580 per chair. The variable costs are $830 per desk unit and $330 per chair. Fixed costs are $125,000.
Business Solutions sells upscale modular desk units and office chairs in the ratio of 2:1 (desk unit:chair). The selling prices are $1,330 per desk unit and $580 per chair. The variable costs are $830 per desk unit and $330 per chair. Fixed costs are $125,000.
Business Solutions sells upscale modular desk units and office chairs in the ratio of 21 (desk unit char). The selling prices are $1,330 per desk unit and $580 per chair. The variable costs are $830 per desk unit and $330 per chair. Fixed costs are $125,000. Required: 1. Compute the selling price per composite unit. (Omit the "$" sign in your response.) e Cuimgute the sellin price per compoaite unit (Omit the "g sign in your response) Selling price 2. Compute the variable costs per composite unit. (Omit the "$" sign in your response.) Variable costs 3. Compute the break-even point in composite units Break-even point composite units 4. Compute the number of units of each product that would be sold at the break-even point. Desk Unit sales unitsExplanation / Answer
1. Composite selling price = 2/3 * 1330 + 1/3 * 580 = $1080
2. Variable cost per composite unit = 2/3 * 830 + 1/3 * 330 = $633.33
3. Break even point = Fixed Cost / Contribution per composite unit
Contribution per composite unit = (1330-830) * 2/3 + (580-330) * 1/3 = 333.33 + 83.33 = 416.66
Break even units = 125000 / 416.66 = 300 units
4. Number of units of Desk = 2/3 * 300 = 200
Number of units of Chair = 300 * 1/3 = 100
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