Reference no: EM132861373
Question - Jane.inc manufactures heating blankets for the health-care market. Each heating blanket sells for $50. The variable costs per unit are as follows:
Direct materials $15
Direct labour 5
Variable manufacturing overhead 4
Budgeted fixed manufacturing overhead is estimated at $500,000, and budgeted fixed selling, general, and administrative costs are expected to be $300,000. Variable selling costs are $6 per unit. Binder estimates that it can sell 50,000 heating blankets.
Binder is subject to tax at a rate of 30%.
Required -
a) Determine the break-even point for the heating blankets (in units).
b) Determine the number of heating blankets (in units) that must be sold for Binder to earn $100,000 in profit after taxes.
c) Determine the dollar amount of heating blanket sales that must be attained in order to earn $300,000 in profit after taxes.
d) Binder is considering adding a second product line to its sales mix: a thermal blanket. Binder estimates that it can sell 25,000 units of the thermal blanket at $30 per unit. The total variable costs would be $12. This second product would increase fixed costs by $50,000. Calculate the break-even volume (in units) of the heating blanket and the thermal blanket.
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