Blossom Products Inc. produces and sells yoga-training products: how-to DVDs an hent set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold and 4.500 equipment sets. Information on the two products is as follows:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Multiple-Product Break-even, Break-Even Sales Revenue
Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic
equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,500
+DVDs and 4,500 equipment sets. Information on the two products is as follows:
|
DVDs
Equipment Sets
Price
Variable cost per unit
Total fixed cost is $99,900.
Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to
health clubs. The company estimates that 9,000 mats can be sold at a price of $16 and a variable cost
per unit of $9. Total fixed cost must be increased by $33,300 (making total fixed cost $133,200).
Assume that anticipated sales of the other products, as well as their prices and variable costs, remain
the same.
Sales
Total variable cost
$8
Contribution margin
2. Compute the break-even quantity of each product.
Total fixed cost
$25
4
3a. Prepare an income statement for Cherry Blossom Products for the coming year.
Cherry Blossom Products Inc.
Income Statement
For the Coming Year
Operating income
15
Transcribed Image Text:Question Content Area Multiple-Product Break-even, Break-Even Sales Revenue Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,500 +DVDs and 4,500 equipment sets. Information on the two products is as follows: | DVDs Equipment Sets Price Variable cost per unit Total fixed cost is $99,900. Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company estimates that 9,000 mats can be sold at a price of $16 and a variable cost per unit of $9. Total fixed cost must be increased by $33,300 (making total fixed cost $133,200). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same. Sales Total variable cost $8 Contribution margin 2. Compute the break-even quantity of each product. Total fixed cost $25 4 3a. Prepare an income statement for Cherry Blossom Products for the coming year. Cherry Blossom Products Inc. Income Statement For the Coming Year Operating income 15
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