k chapter 22 (part 2) > C?? 3 http://eno.mheducation.comvhm.tpx volue 10 00 poin
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k chapter 22 (part 2) > C?? 3 http://eno.mheducation.comvhm.tpx volue 10 00 points National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $57: white, $87, and blue, $112. The per unit variable costs to manufacture and sell these produbts are red, $42, white, $62; and blue, $82. Their sales mix is reflected in a ratio of 4:5:2 (red white:blue). Annual fixed costs shared by all three products are $152,000. One type of raw material has been used to manufacture all three products. The company has developed a new material of equal quality for less cost The new material would reduce variable costs per unit as follows: red, by $12: white, by $22; and blue. by $12. However, the new material requires new equipment, which will increase annual fixed costs by $22,000 Required: 1. Assume if the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. (Round up your composite units to whole number. Omit the "$" sign in your response.) Red at break-even White at break-even Blue at break-even 2. Assume if the company uses the new material, determine its new break-even point in both sales units and sales doliars of each individual product (Round up your composite units to whole number Omit the "s" sign in your response.) Break-Even Points Red at break-even White at break-ever Blue at break-even Sales Units Sales Dollars ??E?????? (?R?????? ??? ????? ?01 EE:RIg acceTRExplanation / Answer
Answer of Part 1:
For Red:
Fixed Cost = $152,000 *40%
Fixed cost = $60,800
Contribution Margin per Unit = Selling price – Variable cost
Contribution Margin per unit = $57 - $42
Contribution Margin per unit = $15
Break Even Point in sales unit = Fixed cost / Contribution Margin per unit
Break Even Point in sales unit = $60,800 / $15
Break Even Point in sales unit = 4,053 units
Break Even points in sales dollars = Units * Selling price
Break Even Points in Sales dollars = 4,053 * $57
Break Even point in sales dollars = $231,021
For White:
Fixed Cost = $152,000 *50%
Fixed cost = $76,000
Contribution Margin per Unit = Selling price – Variable cost
Contribution Margin per unit = $87 - $62
Contribution Margin per unit = $25
Break Even Point in sales unit = Fixed cost / Contribution Margin per unit
Break Even Point in sales unit = $76,000 / $25
Break Even Point in sales unit = 3,040 units
Break Even points in sales dollars = Units * Selling price
Break Even Points in Sales dollars = 3,040 * $87
Break Even point in sales dollars = $264,480
For Blue:
Fixed Cost = $152,000 *20%
Fixed cost = $30,400
Contribution Margin per Unit = Selling price – Variable cost
Contribution Margin per unit = $112 - $82
Contribution Margin per unit = $30
Break Even Point in sales unit = Fixed cost / Contribution Margin per unit
Break Even Point in sales unit = $30,400 / $30
Break Even Point in sales unit = 1,013 units
Break Even points in sales dollars = Units * Selling price
Break Even Points in Sales dollars = 1,013 * $112
Break Even point in sales dollars = $113,456
Answer of Part 2:
New Fixed Cost = $152,000 + $22,000
New Fixed Cost = $174,000
For Red:
New Variable Cost = $42 - $12
New Variable Cost = $30
Fixed Cost = $174,000 * 40%
Fixed Cost =$69,600
Contribution Margin = Selling Price – Variable Cost
Contribution Margin = $57 - $30
Contribution Margin = $27
Break Even Point in Sales Unit = Fixed Cost / Contribution Margin
Break Even Point in Sales Unit = $69,600 / $27
Break Even Point in Sales Unit = 2,578 Units
Break Even Point in Sales Dollars = unit * Selling Price
Break Even point in Sales Dollars = 2,578 * $57
Break Even Point in Sales Dollars = $146,946
For white:
New Variable Cost = $62 - $22
New Variable Cost = $40
Fixed Cost = $174,000 * 50%
Fixed Cost =$87,000
Contribution Margin = Selling Price – Variable Cost
Contribution Margin = $87 - $40
Contribution Margin = $47
Break Even Point in Sales Unit = Fixed Cost / Contribution Margin
Break Even Point in Sales Unit = $87,000 / $47
Break Even Point in Sales Unit = 1,851 Units
Break Even Point in Sales Dollars = unit * Selling Price
Break Even point in Sales Dollars =1,851 * $87
Break Even Point in Sales Dollars = $161,037
For Blue:
New Variable Cost = $82 - $12
New Variable Cost = $70
Fixed Cost = $174,000 * 20%
Fixed Cost =$34,800
Contribution Margin = Selling Price – Variable Cost
Contribution Margin = $112 - $70
Contribution Margin = $42
Break Even Point in Sales Unit = Fixed Cost / Contribution Margin
Break Even Point in Sales Unit = $34,800 / $42
Break Even Point in Sales Unit = 829 Units
Break Even Point in Sales Dollars = unit * Selling Price
Break Even point in Sales Dollars =829 * $112
Break Even Point in Sales Dollars = $92,848
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