data follow. Sales price per unit Variable costs per unit Sales mix percent Tags Small $ 42 $ 32 80% Large $ 62 $ 27 20% rge. Required 1 Required 2 Required 3 paniy as The company is considering buying new equipment that would increase total fixed costs by $61,000 per year and reduce the variable costs of each type of flag by $1 per unit. Complete this question by entering your answers in the tabs below. Required: 1. Compute the weighted-average contribution margin without the new equipment. 2. Assume the new equipment is not purchased. Determine the break-even point in total sales units and the break-even point in units for each product. 3. Assume the new equipment is purchased. Compute the break-even point in total sales units and the number of units to sell for each product. per year. Compute the weighted-average contribution margin without the new equipment.
data follow. Sales price per unit Variable costs per unit Sales mix percent Tags Small $ 42 $ 32 80% Large $ 62 $ 27 20% rge. Required 1 Required 2 Required 3 paniy as The company is considering buying new equipment that would increase total fixed costs by $61,000 per year and reduce the variable costs of each type of flag by $1 per unit. Complete this question by entering your answers in the tabs below. Required: 1. Compute the weighted-average contribution margin without the new equipment. 2. Assume the new equipment is not purchased. Determine the break-even point in total sales units and the break-even point in units for each product. 3. Assume the new equipment is purchased. Compute the break-even point in total sales units and the number of units to sell for each product. per year. Compute the weighted-average contribution margin without the new equipment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 5-7A (Algo) Break-even analysis with two products LO P3
Patriot Company manufactures flags in two sizes, small and large. The company has total fixed costs of $555,000 per year. Additional
data follow.
Sales price per unit
Variable costs per unit
Sales mix percent
Small
$42
$ 32
80%
Large
$ 62
$ 27
The company is considering buying new equipment that would increase total fixed costs by $61,000 per year and reduce the variable
costs of each type of flag by $1 per unit.
Required 1 Required 2 Required 3
20%
Required:
1. Compute the weighted-average contribution margin without the new equipment.
2. Assume the new equipment is not purchased. Determine the break-even point in total sales units and the break-even point in units
for each product.
3. Assume the new equipment is purchased. Compute the break-even point in total sales units and the number of units to sell for each
product.
Complete this question by entering your answers in the tabs below.
$
Compute the weighted-average contribution margin without the new equipment.
Weighted-average contribution margin
10
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