Multi-product b-e h.w. ex.

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School

CUNY Queens College *

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306

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Industrial Engineering

Date

Jan 9, 2024

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docx

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Multi-product break even homework example (use unit CM method): The Queens Heating Company produces and sells two types of water heaters for residential homes. The 30 gallon tank sells for $400 while the 50 gallon tank sells for $800. The marketing department believes that it can sell 1,200 of the 30 gallon tanks and 800 of the 50 gallon tanks during the coming year. Given the following projected income statement based on this forecast: 30 Gallons 50 Gallons Total Sales $480,000 $640,000 $1,120,000 Var. exps. 390,000 480,000 870,000 CM $90,000 $160,000 $ 250,000 Direct FC 30,000 40,000 70,000 Product Margin $60,000 $120,000 $ 180,000 Common FC 26,250 Operating Income $ 153,750 1. What is the breakeven point in units? 2. How many units of each product must be sold at breakeven? 3. Confirm your result is a correct breakeven point.

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Multi-product b-e h.w. ex.

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