Question : 21) Sprint Manufacturing Company produces two products, X and Y. : 1217161

 

21) Sprint Manufacturing Company produces two products, X and Y. The following information is presented for both products:

XY

Selling price per unit$30$20

Variable cost per unit205

 

Total fixed costs are $292,500.

 

Required:

a.Calculate the contribution margin for each product.

b.Calculate breakeven point in units of both X and Y if the sales mix is 3 units of X for every unit of Y.

c.Calculate breakeven volume in total dollars if the sales mix is 2 units of X for every 3 units of Y.

 

22) Ballpark Concessions currently sells hot dogs. During a typical month, the stand reports a profit of $9,000 with sales of $50,000, fixed costs of $21,000, and variable costs of $0.64 per hot dog.

 

Next year, the company plans to start selling nachos for $3 per unit. Nachos will have a variable cost of $0.72 and new equipment and personnel to produce nachos will increase monthly fixed costs by $8,808. Initial sales of nachos should total 5,000 units. Most of the nacho sales are anticipated to come from current hot dog purchasers, therefore, monthly sales of hot dogs are expected to decline to $20,000.

 

After the first year of nacho sales, the company president believes that hot dog sales will increase to $33,750 a month and nacho sales will increase to 7,500 units a month.

 

Required:

a.Determine the monthly breakeven sales in dollars before adding nachos.

b.Determine the monthly breakeven sales during the first year of nachos sales, assuming a constant sales mix of 1 hotdog and 2 units of nachos.

 

23) Bob’s Textile Company sells shirts for men and boys. The average selling price and variable cost for each product are as follows:

 

Men’sBoys’

Selling Price$28.80Selling Price$24.00

Variable Cost$20.40Variable Cost$16.80

 

Fixed costs are $38,400.

 

Required:

a.What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of men’s shirts?

b.What is the operating income, assuming the sales mix is 2:1 in favor of men’s shirts, and sales total 9,000 shirts?

 

24) Mount Carmel Company sells only two products, Product A and Product B.

 

 

Product A

Product B

Total

Selling price

$40

$50

 

Variable cost per unit

$24

$40

 

Total fixed costs

 

 

$840,000

 

Mount Carmel sells two units of Product A for each unit it sells of Product B. Mount Carmel faces a tax rate of 30%.

 

Required:

a.What is the breakeven point in units for each product assuming the sales mix is 2 units of Product A for each unit of Product B?

b.What is the breakeven point if Mount Carmel’s tax rate is reduced to 25%, assuming the sales mix is 2 units of Product A for each unit of Product B?

c.How many units of each product would be sold if Mount Carmel desired an after-tax net income of $73,500, facing a tax rate of 30%?

 

25) Atlanta Radio Supply sells only two products, Product X and Product Y.

 

 

Product X

Product Y

Total

Selling price

$25

$45

 

Variable cost per unit

$20

$35

 

Total fixed costs

 

 

$350,000

 

Atlanta Radio Supply sells three units of Product X for each two units it sells of Product Y. Atlanta Radio Supply has a tax rate of 25%.

 

Required:

a.What is the breakeven point in units for each product, assuming the sales mix is 3 units of Product X for each two units of Product Y?

b.How many units of each product would be sold if Atlanta Radio Supply desired an after-tax net income of $210,000, using its tax rate of 25%?