Pierson Pet Products produces two models of dog beds: Basic and Custom. Price, cost and expected sales volume data for the two models are as follows: Basic $ 24.00 $ 17.00 66,000 Custom $59.00 $ 38.00 44,000 Selling price per bed Variable cost per bed Expected sales (beds) The total fixed costs for the company are $403,200. Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the expected product mix applies regardless of total sales, compute the break-even volume. c. If the product sales mix were to change to three Basic beds for each Custom bed, what would be the new break-even volume?
Pierson Pet Products produces two models of dog beds: Basic and Custom. Price, cost and expected sales volume data for the two models are as follows: Basic $ 24.00 $ 17.00 66,000 Custom $59.00 $ 38.00 44,000 Selling price per bed Variable cost per bed Expected sales (beds) The total fixed costs for the company are $403,200. Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the expected product mix applies regardless of total sales, compute the break-even volume. c. If the product sales mix were to change to three Basic beds for each Custom bed, what would be the new break-even volume?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Pierson Pet Products produces two models of dog beds: Basic and Custom. Price, cost and expected sales volume data for the two
models are as follows:
Selling price per bed
Variable cost per bed
Expected sales (beds)
The total fixed costs for the company are $403,200.
Basic
$24.00
$ 17.00
66,000
Required:
a. What is the anticipated level of profits for the expected sales volumes?
b. Assuming that the expected product mix applies regardless of total sales, compute the break-even volume.
c. If the product sales mix were to change to three Basic beds for each Custom bed, what would be the new break-even volume?
Required A Required B
Complete this question by entering your answers in the tabs below.
Custom
$ 59.00
$38.00
44,000
Basic beds
Custom beds
Required C
Assuming that the expected product mix applies regardless of total sales, compute the break-even volume.
Note: In your computations, round up the total units to break-even to the nearest whole number and round other
intermediate calculations to 2 decimal places.
Break-Even
Volume
< Required A
Required C >
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