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Unformatted text preview: ·2 22 2 ø 絪* á•žLa+ R iPhoneø w ç µ ª O Question 1: Score 10/10 Your response Problem 22-7A: Break-even analysis with composite units L.O. P4, C3 Patriot Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $74; white, $108; and blue, $99. The per unit variable costs to manufacture and sell these products are red, $48; white, $75; and blue, $90. Their sales mix is reflected in a ratio of 5:4:2 (red:white:blue). Annual fixed costs shared by all three products are $179,200. 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 $10; white, by $16; and blue, by $13. However, the new material requires new equipment, which will increase annual fixed costs by $22,400. Requirement 1: If the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. (Omit the "$" sign in your response.) Break-Even Points Red at break-even White at break-even Blue at break-even Sales Units Sales Dollars $ $ $ 3200 (8%) 2560 (8%) 1280 (8%) 236,800 (8%) 276,480 (8%) 126,720 (8%) Requirement 2: If the company uses the new material, determine its new break-even point in both sales units and sales dollars of each individual product. (Omit the "$" sign in your response.) Break-Even Points Red at break-even White at break-even Blue at break-even Sales Units Sales Dollars $ $ $ 2400 (8%) 1920 (8%) 960 (8%) 177,600 (8%) 207,360 (8%) 95,040 (8%) ...
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This note was uploaded on 11/07/2010 for the course BBA 1023 taught by Professor Luoyi during the Spring '10 term at University of Macau.

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