Reference no: EM132748179

Question - ABC and CVP Analysis: Multiple Products

Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow:

	Rose	Violet
Expected sales (in cases)	50,000	10,000
Selling price per case	$101	$82
Direct labor hours	35,950	5,550
Machine hours	9,900	3,450
Receiving orders	48	27
Packing orders	102	54
Material cost per case	$53	$45
Direct labor cost per case	$10	$5

The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours.

	Fixed	Variable
Direct labor benefits	$-	$186,750
Machine costs	200,000*	311,250
Receiving department	205,000	-
Packing department	113,000	-
Total costs	$518,000	$498,000
*All depreciation

Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packages to the nearest whole number.