Multiple-Product Break-Even and Target Profit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Multiple-Product Break-Even and Target Profit
Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 30,000 ceiling fans and 60,000 table fans in the coming year. Product price and cost information includes:
| Ceiling Fan | Table Fan | ||||||
| Price | $50 | $16 | |||||
| Unit variable cost | $11 | $4 | |||||
| Direct fixed cost | $23,000 | $42,000 |
Common fixed selling and administrative expenses total $78,000.
Required:
Transcribed Image Text:4. What if Vandenberg, Inc., wanted to earn operating income equal to $13,200? Calculate the number of ceiling
fans and table fans that must be sold to earn this level of operating income. (Hint: Remember to form a package of
ceiling fans and table fans based on the sales mix and to first calculate the number of packages to earn an
operating income of $13,200.) Round your intermediate calculations and final answers to nearest number.
Break-even ceiling fans
Break-even table fans
Transcribed Image Text:1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)?
Sales mix of ceiling fans to table fans =
1
2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are
sold at break-even? Round your intermediate calculations and final answers to the nearest whole number.
Break-even ceiling fans
2,270
Break-even table fans
4,540
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3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on the unit sales calculated in Requirement
2. If an amount is zero, enter "0". Enter any negative product margin and losses with a minus sign. Do not round intermediate
calculations. Round your final answers to nearest dollar.
Vandenberg, Inc.
Contribution-Margin-Income Statement
For the Coming Year
Ceiling Fans
Table Fans
Total
Sales
113,500
$ 72,640
186,140
Less: Variable expenses
24,970
18,160
43,130
Contribution margin
88,530
54,480
143,010
Less: Direct fixed expenses
23,000
42,000
65,000
Product margin
65,530V $ 12,480 V
78,010
Less: Common fixed expenses
78,000
Operating income
10
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