ORIE_350_Homework__10_spring_2007_answers

ORIE_350_Homework__10_spring_2007_answers - ORIE 350...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ORIE 350 Homework #10 Answers 1. Sundance Inc. makes quality trampolines for home use and for cheerleading and dance teams. They have three models, the Prohopper, the Octagon, and the Elite. Last year, sales were as follows: Prohopper Octagon Elite Sales (units) 140 160 80 Sales ($) $168,000 $288,000 $280,000 Variable costs (per unit) Manufacturing $300 $400 $600 Selling $100 $100 $100 Fixed costs (total): Manufacturing$120,000, Selling, Admin.$280,000 a) Assuming the product mix is constant, find the breakeven point in units of each model. Prohopper: s = $1,200/unit, v = $400/unit Octagon: s = $1,800/unit, v = $500/unit Elite: s = $3,500/unit, v = $700/unit Assemble a basket of 7 Prohoppers, 8 Octagons, and 4 Elites (divide sales by 20) The selling price of a basket is 7(1,200) + 8(1,800) + 4(3,500) = $36,800 The variable cost of a basket is 7(400) + 8(500) + 4(700) = $9,600 The fixed cost is $400,000 BE f 400,000 n 14.705882 s v 36,800 9,600 = = = - - Prohoppers: 103 units, Octagon: 118 units, Elite: 59 units All numbers are rounded to the nearest integer b) Find the annual sales dollars (total) needed to breakeven. Sales = 103(1,200) + 118(1,800) + 59(3,500) = $542,500 The actual number is closer to $541,176, using exact numbers (non-rounded). But, you can’t sell a fraction of a trampoline, so the $542,500 number is probably better for planning purposes.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern