What are total fixed costs

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Question 1 - Coats R Us sells different types of coats to consumers along the east coast of United States. The three types of coats that they sell include winter coats for very low temperatures, windbreakers for chilly temperatures, and rain coats for inclement weather. Sales for these coats will vary based on the time of year. They are currently entering the fourth quarter of the year. They anticipate that winter coat sales in the northern states to be brisk and account for 50% of all sales. The Mid-Atlantic states will also see a rise in the sales of windbreakers as temperatures cool and will account for 40% of sales. The warmer southern states will mostly sell raincoats and they expect that to account for 10% of sales.

During the quarter they will pay $90,000 in salaries, $40,000 in advertising, and $38,000 in equipment rental fees. They also have variable costs of $24 for their windbreakers which they sell at $30. The raincoats have a price of $32 and a variable cost of $24. The winter coats sell for $40 with variable costs of $36.

a) What are total fixed costs?

b) What is the number of break even units for each product?

c) What level of sales dollars are needed for each product to break even?

d) It is anticipated that during the quarter Coats R Us will sell 25,000 winter coats, 20,000 windbreakers, and 5,000 raincoats. What is their margin of safety for each product?

e) If sales are as expected what is their total revenue and profit?

Question 2 - You work for a company that does blood testing and needs to invest in another centrifuge. You are looking at two different models. The first is the Unico PowerSpin LX which can hold 5 test tubes of blood when operating (per run). The second model is the Benchmark Scientific which can hold 6 test tubes when operating (per run). You charge 7¢ per test tube, so the Unico PowerSpin LX earns you 35¢ per run and the Benchmark Scientific earns you 42¢ per run. The Unico PowerSpin LX costs $676 to purchase and each run costs 10¢. The Benchmark Scientific costs $859 to purchase and costs 15¢ per run.

Reference no: EM132823864

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