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3-51. Extensions of CVP Analysis—Multiple Products (ﬁnding missing data)
Clovis Supply sells two models of saddles to retail outﬁtters—basic and custom. Basic saddles sell
for $1,000 each and custom saddles sell for $1,500. The variable cost of a basic saddle is $600 and
that of a custom saddle is $750. Annual ﬁxed costs at Clovis are $280,500. The break-even point at
the current sales mix is 500 total units.
How many basic saddles and how many custom saddles are sold at the break-even level? In other
words, what is the assumed sales mix? lan27114_ch03_080-109.indd 105 (L.O. 4) ✓ Related Resources
See pages 000 to 000
of the Annotated Instructor’s
Edition for general suggestions related to the chapters
in Part One.
1 10/5/09 11:09:29 PM 10/22/09 10:34:04 PM REVISED PAGES Part II 106 Cost Analysis and Estimation 1 3.52. Extensions of the CVP Basic Model—Multiple Products and Taxes
Assume that Ocean King Products sells three varieties of canned seafood with the following prices
per Case mhhe.com/lanen3e Variable Cost
per Case Fixed Cost
per Month $3
$46,200 Variety 1 . . . . . . . .
Variety 2 . . . . . . . .
Variety 3 . . . . . . . .
Entire ﬁrm. . . . . . . (L.O. 4) Orientation The sales mix (in cases) is 40 percent Variety 1, 35 percent Variety 2, Organizing Yourself
Preparing and and 25 percent Variety 3. for Success in College
a. At what sales revenue per month does the company break even?
b. Suppose the company is subject to a 35 percent tax rate on income. At what sales revenue per
month will the company earn $40,950 after taxes assuming the same sales mix?
(L.O. 4) S 3.53. Extensions of the CVP Model—Multiple Products and Taxes
Assume that Limitless Labs, Inc., offers three basic drug-testing services for professional athletes.
Here are its prices and costs:
Basic . . . . . . . . . . . . .
Retest . . . . . . . . . . . .
Vital . . . . . . . . . . . . . . Variable Cost
per Unit CH
$ 120 A P T
4,000 Making Yourself
1 Units Sold
E R S850 N
Successful PART ONE in College Variable costs include the labor costs of 2 medical technicians at the lab. Fixed costs of
the Approaching College Reading and
$390,000 per year include building and equipment costs and the College-Level Vocabulary
Developing a costs of administration. A basic
“unit” is a routine drug test administered. A retest is given if there is concern about the results
of the ﬁrst test, particularly if the test indicates that the athlete has taken drugs that are on the
banned drug list. Retests are not done by the laboratory that performed the basic test. A “vital”
3 Approaching College Assignments:
test is the laboratory’s code for a high-proﬁle case. This might be a test of a famous athlete and/
Reading Textbooks and Following Directions
or a test that might be challenged in court. The laboratory does extra work...
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- Spring '07
- Contribution Margin, CVP analysis