Reference no: EM132460988
Discussion Question 1: What is the break-even point? A) In units? B) In sales dollars?
Discussion Question 2: A large department store has offered to purchase 8,000 sunglasses(one time) if the price was lowered to $14 per pair. Ban Oak Corp's maximum capacity is 20,000 units.
A) Based on the cost data provided, what would be the impact of the special sale on sales, costs, and operating income if Ban Oak Corp accepted this sale? Use a contribution margin income statement to show your results.
B) Do you think Ban Oak Corp should accept this sale? Support your decision with evidence and analysis.
Discussion Question 3: Research has shown that there is a need for mirrored sunglasses on the market. Ban Oak Corp would be able to produce mirrored sunglasses on their existing assembly line if they purchased a new machine to add the reflective coating. This would increase fixed overhead costs by $25,000 per month (still based on normal production volume of 15,000 units). The variable materials costs (not all variable costs - just variable material costs) for the mirrored sunglasses would also be double the cost of the variable materials for the regular sunglasses. Maximum production for both types of sunglasses together would still be 20,000 units because the same assembly line would be used. The mirrored sunglasses would sell for $20 each.
A) What would be the break-even point if Ban Oak Corp only sold mirrored sunglasses?
B) Create a contribution income statement for a month in which Ban Oak Corp sold 11,000 regular sunglasses, and 7,000 mirrored sunglasses.
C) Explain, in your own words, how the changes to fixed and variable costs for the mirrored sunglasses impacts profitability.
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: Based on the cost data provided, what would be the impact of the special sale on sales, costs, and operating income if Ban Oak Corp accepted this sale?
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