Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type of Sales Price Bookshelf per Unit Basic Deluxe The company is interested in determining how many of each type of bookshelf would have to be sold in order t break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $341,880. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Type of Bookshelf $5.00 9.00 Basic Deluxe Variable Cost per Unit Percent of Sales Mix $1.75 8.10 Break-Even Sales in Units Break-Even Sales in Dollars
Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type of Sales Price Bookshelf per Unit Basic Deluxe The company is interested in determining how many of each type of bookshelf would have to be sold in order t break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $341,880. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Type of Bookshelf $5.00 9.00 Basic Deluxe Variable Cost per Unit Percent of Sales Mix $1.75 8.10 Break-Even Sales in Units Break-Even Sales in Dollars
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
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![Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.
Type of Sales Price
Variable Cost
Bookshelf
per Unit
per Unit
Basic
Deluxe
Type of
Bookshelf
The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit
contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $341,880. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following
table.
Basic
$5.00
9.00
Deluxe
$1.75
8.10
Percent of
Sales Mix
Break-Even
Sales in Units
Break-Even Sales
in Dollars
Target Profit
Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming
that all data for the coming year is the same as the current year, except for the amount of sales.
1. If Cover-to-Cover Company wants to increase its profit by $30,000 in the coming year, what must their amount of sales be?
2. If Biblio Files Company wants to increase its profit by $30,000 in the coming year, what must their amount of sales be?
3. What would explain the difference between your answers for (1) and (2)?
a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income.
b. Cover-to-Cover Company's contribution margin ratio is lower, meaning that it's more efficient in its operations.
c. The companies have goals that are not in the relevant range.
d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F034c8dbf-c1e3-4fe7-a5c2-11d6cef5d635%2F5037b17d-56a8-4e7c-a6dd-682932d54fab%2F1n2l9au_processed.png&w=3840&q=75)
Transcribed Image Text:Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.
Type of Sales Price
Variable Cost
Bookshelf
per Unit
per Unit
Basic
Deluxe
Type of
Bookshelf
The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called "Combined," the unit
contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $341,880. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following
table.
Basic
$5.00
9.00
Deluxe
$1.75
8.10
Percent of
Sales Mix
Break-Even
Sales in Units
Break-Even Sales
in Dollars
Target Profit
Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming
that all data for the coming year is the same as the current year, except for the amount of sales.
1. If Cover-to-Cover Company wants to increase its profit by $30,000 in the coming year, what must their amount of sales be?
2. If Biblio Files Company wants to increase its profit by $30,000 in the coming year, what must their amount of sales be?
3. What would explain the difference between your answers for (1) and (2)?
a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income.
b. Cover-to-Cover Company's contribution margin ratio is lower, meaning that it's more efficient in its operations.
c. The companies have goals that are not in the relevant range.
d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit.
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