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Question - Multiple-Product Break-Even and Target Profit

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Question - Multiple-Product Break-Even and Target Profit

Vandenberg, Inc., produces and sells two products: a celling fan and a table fan. Vandenberg plans to sell 20,000 ceiling fans and 50,000 table fans in the coming year. Product price and cost Information includes:

 

Ceiling Fan

Table Fan

Price

$54

$13

Unit variable cost

$8

$9

Direct fixed cost

$25,200

$42,000

Common fixed selling and administrative expenses total $96,000.

Required -

1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)?

2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Round your intermediate calculations and final answers to the nearest whole number.

3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on the unit sales calculated in Requirement 2.

4. What if Vandenberg, Inc., wanted to earn operating income equal to $15,200? Calculate the number of ceiling fans and table fans that must be sold to earn this level of operating income.

Reference no: EM132438282

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