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Question - The Rainbow Creams produces natural beard products. Two cream-based products are produced in the same cell with similar equipment: White Cream and Red Cream.
Annual fixed costs of this cell are $5000. The cost driver for variable costs is? "containers of cream? produced." The variable cost is $1.50 per container of White and $1.80 per container of Red cream. White cream sells for $6.00 per container and Red cream for $7.50 per container. The demand for White cream is twice that of Red cream. Based on the 2:1 demand, production follows and two containers of White are produced for every container of Red cream.
Find the number of containers of each product at the break-even point.
A. Assuming the 2:1 ratio is maintained, how many containers of White Cream should be produced and sold to break-even? (round to nearest whole number)
B. Assuming the 2:1 ratio is maintained, how many containers of Red Cream should be produced and sold to break-even? (round to nearest whole number)
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