Question

The Terrence Co. manufactures two products, Baubles and Trinkets. The following are projections for the coming year: Baubles Trinkets 16,000 units 8,000 units Sales $16,000 $16,000 Costs: Fixed$3,600 $11,520 Variable 6,400 10,000 3,200 14,720 Income before taxes $6,000 $1,280 How many Baubles will be sold at the break-even point, assuming that the facilities are jointly used with the sales mix remaining constant

Answer 1

Answer:

Bauble to be sold for break even = 5484

Explanation:

Sales Mixture = 16000 : 8000 =  2:1                  2            :         1  

                                                                             Bauble         Trinkets  

Selling Price P.u (16/16) : (16/8)                         =       1                    2

Variable Cost  (6400/16000) : ( 11520/16000)  =     (0.4)              (0.72)

Contribution margin Per unit (Sp-Vc)                =      0.6                1.28      

Com-posit Cm 2 baubles 1 trinkets                   = 0.6*2+1.28*1 =   2.48  

Fix Cost Total  =  3200+3600 = 6800

Break-Even units =  6800/2.48 = 2741

Baubles 2742*2  = 5484*0.6 = 3290.4

Trinkets 2742*1   = 2742*1.28 = 3509.7